Where to invest $1000 right now: 5 promising European stocks

The European market is at an unusual point: several long-term trends - AI-infrastructure, energy transition, the return of industrial manufacturing and the digitalization of business - have coincided with the fact that European companies are still worth less than many of their American counterparts. At the same time, some companies' profits are already starting to grow faster.

We have chosen five promising companies - these are not "hype" stories, but real businesses with a clear model, strong financial results and a clear investment case. ASML and Schneider Electric are the main bets on the AI-infrastructure cycle, and the shares of both companies are already expensive.

SAP and Siemens look more balanced: they have strong positions in enterprise software, automation and industrial digitalization, and the business is supported by large order books and long-term contracts.

Rather, Deutsche Telekom plays the role of a protective asset - with steady cash flow, dividends and exposure to the US telecom market via T-Mobile US.

Looking at the balance of growth, business sustainability, and current valuations, the $1,000 allocation between these companies might look like this: 25% each in ASML and Schneider Electric stock, 20% each in SAP and Siemens, and 10% in Deutsche Telekom securities.

ASML is the world's only manufacturer of EUV (extreme ultraviolet light) lithography machines, without which no advanced chip can be created: neither Nvidia's GPUs, nor Apple's chips, nor AMD's AI gas pedals. Attempts by competitors, notably Nikon and Canon, to bridge the technology gap have not been successful and there is still no commercially comparable EUV solution.

What the numbers show

ASML's revenue grew 14.3% to €8.8 billion in the first quarter of 2026, and the company raised its full-year 2026 revenue guidance to a range of €36 billion to €40 billion. Long-term guidance confirmed at the November 2024 investor day: €44-60 billion annualized revenue.

It's worth noting that ASML trades at about 30 to expected earnings (P/E) - more expensive than most companies in the semiconductor equipment sector, where the average is closer to 22-25.

What is important for an investor

Rising spending by hyperscalers - Microsoft, Amazon, Google and Meta - on AI infrastructure directly increases demand for ASML's lithography equipment. The company makes money not only on the sale of new systems, but also on service: the segment - Installed Base Management - grew 25% year-on-year in the first quarter.

The average target price for ASML shares is around €1,488, suggesting a potential upside of around 10% from current levels. Most analysts maintain Buy and Strong Buy recommendations.

China's share of ASML's system sales fell sharply to 19% in the first quarter of 2026 from 36% a quarter earlier due to export restrictions from the US and the Netherlands. This is one of the main risks for the company: further tightening of restrictions could narrow the available market. The second risk is related to the cyclicality of the industry. If investments in semiconductor capacity expansion start to slow down, ASML's orders could fall before it is reflected in its financial statements.

Siemens is one of the largest European industrial-technology concerns, working at once at the intersection of several big trends: digitalization of industry, electrification of infrastructure and AI-automation. Unlike many "technological" stories, Siemens makes money not on market expectations, but on selling real solutions to large customers.

What the numbers show

Siemens increased orders by 18% on a comparable basis to €24.1 billion in the second quarter of fiscal 2026. The company also raised its forecast for adjusted earnings per share for 2026 to €10.7-11.1 versus the previous range of €10.4-11. The industrial automation and software division (Digital Industries) now expects revenue growth of 7-10%, while Smart Infrastructure, responsible for energy grids and smart building infrastructure, expects 8-10% growth. Earlier Siemens reported strengthening its partnership with Nvidia and Microsoft, focusing on industrial AI.

What is important for an investor

The ONE Tech Company program helps Siemens focus on its most profitable areas - Digital Industries and Smart Infrastructure. The acquisition of Altair Engineering strengthens Siemens' position in engineering and industrial software. Additional support is given by the growth of defense spending in Europe. Most analysts advise buying Siemens shares, with 17 Buy and Outperform ratings out of 24. The average target is €282.9, with a potential upside of about 3% from the current value.

Siemens is a diversified conglomerate: this reduces risks, but at the same time limits the potential for a sharp rise in the stock at the expense of any one area. For example, the Mobility division, which produces trains and railroad systems, is currently experiencing a temporary slowdown, although management is keeping its annual forecast unchanged. There is also a currency risk: a significant part of Siemens' revenue is received in dollars and currencies of developing countries, while a significant share of expenses remains in euros.

SAP is the largest developer of enterprise software outside the United States. More than 400,000 customers in 180 countries use SAP ERP systems to manage everything from supply chains to financial reporting. Because of this, the company has one of the highest barriers to customer exit: switching to another system is expensive, difficult and risky for the business.

What the numbers show

SAP continued to show strong growth in its cloud business in the first quarter of 2026, with its current portfolio (cloud backlog) of active contracts up 25% in constant currencies to €21.9 billion, with cloud revenue up 27% and its key Cloud ERP Suite business up 30%. SAP shares fell about 6% on April 23 after the report was released, with investors disappointed by revenue of $11.04 billion ($9.55 billion) versus expectations of $11.17 billion, although earnings per share came in above forecasts. SAP warned that its full-year 2026 cloud revenue growth forecast is based on the assumption of a rapid de-escalation of the conflict in the Middle East.

The company plans to pay a dividend of €2.5 per share for fiscal 2025 - 6.4% above last year's level. SAP has been paying dividends for 25 years and has never reduced its payout.

SAP stock trades with a P/E ratio of about 22.6 and a PEG ratio of just 0.19 - suggesting an attractive valuation given its earnings growth rate.

What is important for an investor

SAP is going through a transition from one-time license sales to a cloud subscription model. This transition often temporarily squeezes revenue at first, but then makes the business more profitable and predictable through recurring payments.

An additional risk is currency fluctuations: a significant part of SAP's revenue is received in dollars, while the company's shares are traded in euros. At the same time, competition from Oracle and Microsoft is intensifying.

Analysts' average target price for SAP shares is around €210 - almost 20% higher than the current value. Despite the stock's weak performance in recent months, most analysts maintain Buy and Overweight ratings, continuing to bet on SAP's move to a cloud model and the integration of AI solutions into the company's products.

Schneider Electric is a major supplier of power management and industrial automation systems, the kind of systems every data center, factory and modern building needs. The AI boom has dramatically increased demand for cooling, power supply and power distribution for data centers - and these are key areas of Schneider Electric's business.

What the numbers show

Schneider Electric reported record quarterly revenue of €9.8 billion in the first quarter of 2026, with organic growth of 11%. The key Energy Management business, which deals with power supply and infrastructure management, grew 13% to €8 billion. Schneider Electric CEO Olivier Blum called what is happening "the fifth industrial revolution," in which Schneider is positioned as an AI infrastructure systems integrator.

The company reaffirmed its outlook for 2026: organic revenue growth of 7-10% and Adjusted EBITA growth of 10-15%. In March 2026, the company also launched a €2.5-3.5 billion share buyback program until 2030.

What is important for an investor

Schneider Electric is benefiting from the AI boom in a different way than chip makers or cloud platforms - through the infrastructure without which AI data centers cannot operate. One of Schneider Electric's main risks is currency: the company expects exchange rate fluctuations to reduce 2026 revenue by €750 million to €850 million. Additional pressure comes from geopolitical instability in the Middle East, which affects the company's business in the South Asia region and international markets.

Most analysts recommend buying Schneider Electric shares (Buy and Strong Buy ratings). The average target price of the stock is around €300.5 and implies a potential upside of about 10%.

Deutsche Telekom can hardly be called a "hype" company - unless you look at its financials. With a 52 percent stake in T-Mobile US, the German telecom flagship has effectively become a bet on the largest and one of the fastest growing mobile markets in the world - the United States.

What the numbers show

Deutsche Telekom increased adjusted net income by 6.5% to €2.6 billion in the first quarter of fiscal 2026 (report published on May 13), with net revenue up 4.7% in organic terms to €29.9 billion.

Deutsche Telekom slightly raised its outlook for 2026 and now expects adjusted EBITDA LA (after lease expenses) of around €47.5 billion (Q1 €11.5 billion) and free cash flow of around €19.8 billion. The outlook for adjusted earnings per share remained unchanged at around €2.2 per share.

The company also continues to increase its payout to shareholders: the dividend for 2025 will be €1 per share - 11% above last year's level. The forward dividend yield is estimated at around 3.7%. Deutsche Telekom has been paying dividends since its initial public offering in 1996.

What is important for an investor

Deutsche Telekom is a rare combination for the European market of a stable defensive business and structural growth through its stake in T-Mobile US. This means both a stable dividend and the opportunity to participate in the growth of the US telecom market through a European share. An additional driver is T-Mobile US' strong results: the company raised its 2026 free cash flow forecast to $18.1-18.7 billion and increased its capital return program to shareholders to $18.2 billion.

In April 2026, Bloomberg reported that Deutsche Telekom was studying the possibility of a full merger with T-Mobile US. This scenario poses regulatory risks: U.S. antitrust authorities are scrutinizing the consolidation of the telecom market. At the same time, Deutsche Telekom's core business in Germany continues to face pressure: in the first quarter, the company lost 83,000 fixed lines, reflecting a long-term decline in demand for traditional telephony.

The average target price for Deutsche Telekom shares is around €38 - almost 30% above the current value. The consensus rating remains at Strong Buy: the market continues to bet on T-Mobile US growth, stable cash flow and long-term demand for telecom infrastructure.

This article was AI-translated and verified by a human editor