Typos

Tech Rally: Europe Takes the Baton from the US

Published January 20, 2026, 06:35
Tech Rally: Europe Takes the Baton from the US

European technology is experiencing a remarkable surge in performance compared to the US, with the sector rising 10% on the Stoxx Europe 600 index in January, contrasting with the stagnation of the corresponding S&P 500 index in the US. This growth is primarily driven by Europe's strong exposure to microchip equipment companies, such as ASML Holding, ASM International, and BE Semiconductor Industries, which account for 40% of the Stoxx 600 Technology index and contribute 90% of the sector's year-to-date gains. The optimistic outlook for increased spending by Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest microchip manufacturer, further boosts the upward trajectory of European companies. TSMC forecasts a 30% increase in spending in 2026, investing in expanding its production capacity in Taiwan and the US. Analysts, like Andrew Gardiner of Citigroup, believe that the TSMC update is particularly positive for microchip equipment suppliers in Europe, as demand is expected to remain strong beyond 2026. Morgan Stanley has raised its price target for ASML to €1,400, anticipating strong orders and growth in 2027. This shift is noteworthy, as European companies had lagged behind the Philadelphia Semiconductor Index since the beginning of 2023, with investors favoring companies directly benefiting from the artificial intelligence boom. The increasing demand for AI chips and the need for additional equipment have reversed this trend.