issued Sunday, June 28, 2026 · 08:41 PM
Investors looking for greater exposure to artificial intelligence in Europe are creatively searching for companies that enable the technology or stand to benefit from it, as the prices of the usual suspects soar.
While the U.S. and Asian markets are packed with AI and memory chip stocks, Europe has only a handful. Relatively limited liquidity means these trades are crowded, and as valuations rise, investors are looking for other ways to take advantage of the world’s most important trades.
This search leads them to companies that are heavy users of AI, such as banks, and companies that sell to hyperscalers, such as energy and infrastructure providers. That proved to be a good strategy in a week when skepticism about AI’s lofty valuations rattled America’s biggest tech stocks.
“The view is that hyperscaler capex is someone else’s sales,” said Stefan Deo, senior portfolio manager at Eleva Capital, adding that there is an opportunity in Europe for “classic pick-and-shovel deals.”
This trend is driven by the simple fact that Europe lacks a deep bench of large-cap tech stocks that play into the AI theme. The tech sector has just 9% weight in the Stoxx 600, compared to 44% in the S&P 500. Turning to the semiconductor industry, it drops to 6% compared to 19% for the S&P 500.
Electrification and power supply are key areas. The European Union has provided more than 800 billion euros ($912 billion) in subsidies to decarbonize and improve electricity supply, and Germany has prepared its own 500 billion euro fiscal package. France’s Schneider Electric is up 28% over the past year, Italy’s Prysmian is up about 150% and Siemens Energy is up about 66%.
Swiss company ABB, which uses power distribution for Microsoft Corp’s data centers, is another beneficiary. The company’s stock is up 84% over the past year, and the company is collaborating with Nvidia on a next-generation 800-volt DC architecture for gigawatt-scale facilities.
“NVIDIA gets the headlines, ABB gets the order books,” Michela Ferrulli, founder of Calibrate Management, said Wednesday at the Thorne Monaco conference.
These stocks have another appeal. That’s because it’s cheap. The MSCI Europe Semiconductor Index’s forward price-to-earnings ratio rose to 45 times earlier this month, its highest level since the global financial crisis. In contrast, industrial stocks exposed to AI are valued at around 30 times expected earnings, while adopters trade at a modest discount to the broader market at less than 15 times.
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Investors are now turning their attention to adopters, trying to determine which companies can gain the most profit increases from improved productivity and fewer employees. One sector in particular that is emerging as a winner is banking.
Morgan Stanley estimates that AI could increase productivity in banks by up to 50% over the next five to 10 years. Banco Santander has set a goal of generating more than €1 billion in business value from AI between 2026 and 2028 through additional revenue and cost savings. HSBC Holdings expects to enable more than 200 new AI use cases over the next two years.
Gilles Gibou, head of equities at BNP Paribas Asset Management, says lenders are “increasingly seen as the main beneficiary of AI in terms of cost reduction”.
There are some pure AI plays in Europe. Stocks involved in building large-scale computing power in data centers are gaining attention. France’s Soitec has posted triple-digit profits this year, but the photonics space remains a niche mid-cap space with limited liquidity and high volatility.
Meanwhile, core semiconductor companies like ASML Holding and BE Semiconductor Industries remain must-have stocks when it comes to AI, but the space is overcrowded, said Jean-Marc Delfeux, head of equities at Tikehau Capital. “They became expensive, very expensive in fact, so we started cutting positions.”
Efforts to move beyond clear winners paid off last week, when market volatility soared and investors sold core AI stocks as doubts about overcrowding and long-term expectations emerged. Meanwhile, the UBS Group’s basket of European AI companies rose nearly 2%.
This could even be Europe’s AI moment, according to Citigroup strategists led by Beata Manthey. They believe industrials, healthcare, IT, telecom, and financial stocks could benefit from AI’s productivity gains.
“Global AI trade has become more nuanced this year,” they say. “The key question is whether the AI industry will apply a selective lens to the companies that most effectively deploy AI.”Bloomberg
