With the “Fantastic Four”, European markets compete in performance vs. the US “Magnificent Seven” over the last 5 years

Analysis of the performance of emblematic American stocks over the last 5 or even 10 years shows significant disparities. Europe also has its champions with the “Fantastic Four”.

The heavyweight champion, Nvidia, achieved an astronomical performance of +17,425% over 10 years, which means that the valuation has multiplied 175 times since the end of 2013. Even over 5 years, Nvidia is clearly above the fray with an increase of +1566%, far ahead of the following US value, Tesla with +745%. Apple comes in 3rd position with its share price increasing by +380% since the end of 2018.

This spectacular performance for Nvidia (multiplication of market capitalization by 16 in 5 years) was possible both by an original valuation of "only" $120 billion at the end of 2018 (base effect), and by an unprecedented rise in power in terms of speed.

Note the “less impressive” progression of Amazon compared to the group of “Magnificent 7” (+127% over 5 years) which is doing a little better than the S&P500 (99%) but is well behind the other major US tech stocks.

?The European “Fantastic Four” have thus achieved a remarkable performance over 5 years and are gaining ground compared to the “historical” GAFAM

On the European side, the top group is made up of 4 stocks. In the lead, ASML, European semiconductor champion with an increase of +523% in 5 years. Closely followed by Novo Nordisk, the leading European stock market capitalization and a major player in the fight against obesity with +450%. More surprisingly, LVMH increased “only” by +212% over this period. SAP, one of the largest European capitalizations (€196 billion) and leader in the Software sector, achieved performance of +82% over 5 years. All these values beat the Stoxx600 over the same period (+63%) and only SAP experienced growth less than that of the S&P500 (+99%).

The European “Fantastic Four” have thus achieved a remarkable performance over 5 years and are gaining ground compared to the “historical” GAFAM. The performance comparison of the 11 values shows that ASML and Novo Nordisk slip into 3rd and 4th position, after Nvidia and Tesla, but ahead of Apple and Microsoft (see graph below). A relative performance for these two European values that few investors know.

All these values have the characteristic of being growth values (*), and of having placed innovation at the heart of their model.

These 11 stocks have recorded regular increases over the last 10 years, however only Novo Nordisk and LVMH have recorded an increase every year since 12/31/2013. All other stocks recorded a marked correction in 2022. Among these stocks, Meta recorded the strongest “drawdown” with a -64% drop in its valuation in 2022, before reaching new highs in 2024. This is therefore a somewhat atypical reversal story within GAFAM.

Stocks that outperform strongly over a long period tend to continue their momentum

In summary, the spectacular journeys of these companies lead us to the following thoughts:

• Technological disruptions are leading to the creation of world leaders/“megacaps” (companies with very high capitalization) in an increasingly rapid time.
• Innovation is at the heart of the success of global leaders.
• ·With the “Fantastic Four”, Europe benefits from leaders whose long term performance are comparable to the US “Magnificent 7”.
• Stocks that outperform strongly over a long period tend to continue their momentum.
• The momentum strategy, an approach recommended by Phiadvisor Valquant's system, is the most appropriate for capturing the performance of these companies.

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Lionel Pellicer, Associate and co-founder of Phiadvisor Valquant

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Note: (*) Novo Nordisk is a defensive stock (Pharmaceuticals sector) but behaves like a growth stock