JPMorgan’s Top European Investment Themes for 2025–26

JPMorgan's European strategists, led by Mislav Matejka, have pinpointed sectors set to outperform over the next 12-18 months. Structural tailwinds, fiscal stimuli, and policy shifts underpin their bullish outlook.

1. Defense: From 2% to 3.5% of GDP

Rising geopolitical tensions are driving a surge in defense budgets across Europe. JPMorgan expects average defense spending to climb from 2% to 3.5% of GDP by decade's end, fueling revenue growth for prime contractors.

• Valuation Insight: Despite tight multiples, strong earnings growth justifies a “structural buy” stance. Current sector valuations can be compared via the Sector P/E Ratio API, which shows European defense trading at a modest premium to the broad market.

2. Germany ‘Whatever It Takes' Infrastructure Fund

Germany's €500 billion infrastructure package—spread over 12 years—will benefit construction materials, industrials, and transportation names. JPMorgan's basket includes Siemens, UniCredit, Rheinmetall, Vinci, and Siemens Energy, all poised to capture waves of public‑works spending.

3. Financials: Banks & Insurance

While near‑term rate cuts warrant caution on banks, medium‑term tailwinds include balance‑sheet repair, credit flow recovery, and a lower cost of equity.

• Insurance Upside: The sector benefits from aging populations and rising premiums. Insurance valuations versus history and peers are accessible through the Ratios TTM API, which tracks P/E, ROE, and dividend yields across Europe's insurers.

By aligning portfolios with these themes—defense, German infrastructure, and financials—investors can position for Europe's next cycle of policy‑driven opportunities.