American technology companies are making headlines, while most members of a group known as Seven wonderful ones -Apple, Amazon, Alphabet, Microsoft, Meta, Nvidia and Tesla – are doing well and continue to rise in the stock market. A pace that the European giants in the sector, with the exception of ASML and SAP, find it difficult to keep up.
“The hype around the possibility of artificial intelligence (AI) has taken many companies to a very high level, especially in the United States. In Europe, we expect only indirect benefits from AI for technology,” explains Mark Denham, Head of European Equities at Carmignac.
An example of a European company that will benefit from expectations related to artificial intelligence is ASML – a world leader in lithography, a crucial step in semiconductor manufacturing -, “because more sophisticated manufacturing equipment to produce new artificial intelligence chips,” Denham points out.
(AI saves Nvidia from chip crisis: Its sales grow 86% in 2023, compared to the decline of Intel or Samsung)
“In addition, many software companies will incorporate artificial intelligence into their productssuch as SAP,” he adds.
The exposure of both companies, ASML and SAP, to this technology positively affected their results and, consequently, in its market capitalization.
ASML and SAP
ASML had a net profit of €7,839 million in 2023, It is 39.4% more compared to last year’s result. Sales of the Dutch multinational company grew by 30%, reaching 27,558 million euros.
In 2023, SAP’s revenue grew by 167%, reaching 6,103 million euros. The company used the presentation of its accounts to inform the market that it intends to focus on such strategic areas as, in particular, artificial intelligence.
To this end, SAP plans to launch restructuring program company-wide during the current year and that includes the elimination of about 8,000 jobs, 7.4% of the workforce.
Thanks for the good results, both ASML and SAP are at the highest level. Shares of the Dutch company hit €850 after rising 25.3% year-to-date. During the same period, the shares of the German company rose by 20.5%, up to 168 euros each.
Other major technology companies
Two other European tech giants also recorded double-digit growth this year: the Dutch ASM (16.2%) and the Swiss Temenas (12%). Take it (9.2%), Nokia (8.2%), Software AG (6.6%), The only Internet (2.4%) in Sage (0.8%) are also trading in the positive.
On the contrary, the rest components of the Stoxx Europe 600 Technology Index -ams Osram, Atos, Ericsson, Hexagon, Infineon, Logitech and STMicroelectronics – all suffered declines in the first half of the year.
It is especially noticeable Athos crash, 62.5%. What was once the flagship of the French tech industry was forced out abandon their capital raising plans which allows you to relieve the pressure of your debt.
As Athos explained, “in view of the evolution of the market context”, the conditions for this capital increase, which was to be carried out with preferential subscription rights for 720 million euros, have not been met.
Sector against sector
Instead, the French company is immersed in “discussions with its banks to reach a plan to refinance its financial debt.” Atos announced the change of plans last Monday, in a session in which it suffered a severe stock market punishment. It fell 29.3%, the biggest drop in its history.
Descent of Athos triple the drop registered by Teslathe worst member Seven wonderful onesyielding 23.2% by early 2024. Adding to the decline of the electric car maker an apple2.2%.
(The Magnificent Seven will not fail in early 2024: it will grow to 26% in the stock market thanks to the strengthening of artificial intelligence)
On the contrary, Nvidia rebounds 42%; Metaand 32.8%; Amazonand 12.5%; Microsoft9.9%, and Alphabetand 4.3%.
Despite this, the Stoxx Europe 600 Technology Index has risen by 11.4% since January 1. Although its composition and the number of companies that are part of it are very different, the evolution of the European index is more positive than the S&P 500 information technology sector -which adds 8.4%- or the Nasdaq 100 -which adds 5.7%-.
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