Forget the US Magnificent 7 – Europe has its own version that has delivered better growth so far in 2024

Data from eToro shows that the top seven European tech stocks posted higher growth in the first three months of 2024 than the much-touted US Magnificent 7 group.

Europe’s own ‘Magnificent 7’, consisting of ASML, SAP, Adyen, RELX, Infineon, STMicroelectronics and Capgemini, achieved 15 percent growth, surpassing the seven US tech giants, which rose 12 percent.

The seven beautiful American stocks: Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla, nicknamed for their enormous value and growth in 2023, are worth more than the stock markets of Britain, Japan, France, China and Canada combined.

The seven major players helped the S&P 500 rise 19 percent last year, while without their input the index would have risen only five percent.

These companies represent almost a third, 29 percent, of the value of the S&P 500.

While the Mag 7 have undoubtedly proven to be good investments, delivering a 106 percent return in 2023, data from eToro indicates that European tech stocks are delivering more attractive margins so far in 2024.

However, over the past five years, the US Mag 7 has achieved a return of 291 percent, compared to the EU Mag 7’s 160 percent.

The EU Mag 7, like the US version, consists of technology-based stocks. However, according to eToro, these stocks can benefit more because the European market does not have such technological dominance.

Ben Laidler, Global Markets Strategist at eToro, said: “Europe’s ‘Magnificent 7’ has potentially benefited from a scarcity valuation premium, as the technology and communications sector represents just 11 percent of the European market, compared to a huge 40 percent in the US.

“While the European Mag 7 has historically lagged behind US competitors, they have consistently outperformed the Stoxx 600 and are gaining significant momentum this year.

“At the forefront is semiconductor company ASML, whose shares have risen 50 percent in the past year as its lithography machines drive the massive growth of AI.”

He added: “On the other hand, with Tesla and Apple faltering lately, America’s Mag 7 appears to be losing their collective grip on the markets.”

ASML, while by far the most valuable of the EU Mag 7, is overshadowed by its US Mag 7 competitors.

With a market capitalization of €364 billion ($454 billion), ASML easily outpaces the rest of the EU Mag 7, €150 billion more than the next largest, SAP.

Yet ASML lags behind even the smallest of the US Mag 7, Tesla, which has a market capitalization of $492 billion.

The other six in the US have market capitalizations of over $1 trillion, with Microsoft being the largest at $3.09 trillion.

Meanwhile, Granolas, Europe’s other group of stocks said to rival the Magnificent 7, are up just four percent so far this year.

The eleven companies are named after their combined first initials, which spell Grannnllass, and are, according to Goldman Sachs analysts, “internationally known producers of quality growth.”

The Granolas are composed of GlaxoSmithKline, Roche, ASML, Nestle, Novartis, Novo Nordisk, L’Oréal, LVMH, AstraZeneca, SAP and Sanofi.

“Granolas shares have fueled the Stoxx 600’s longer-term gains, but their defensive growth has lagged over the past year as investors have looked for more immediate beneficiaries of the coming rate cuts and economic recovery in Europe,” he said. Laidler.

‘While the Granolas offer a diversified and lower valued portfolio than the US Magnificent 7, investors may want to look to Europe’s largest technology players for an alternative way to benefit from global technology growth.’