Goldman Sachs has updated its European conviction list for August, identifying high-upside opportunities across the defense, technology, and logistics sectors.
Ceres Power and the Data Center Growth Wave
Goldman Sachs analysts place Ceres Power at the top of their upside projections, forecasting a 168% increase for the U.K.-based fuel cell developer. The stock faced a 31% decline in July, driven by broader market concerns regarding supply chain execution and the sustainability of AI-related hardware demand. Despite this volatility, Goldman suggests the current price levels represent an attractive entry point. The firm’s analysis highlights Ceres Power’s scalable licensing model as a key differentiator, positioning the company to capture value as its licensees expand to meet the surging infrastructure requirements of global data centers.
Did you know?
The “HALO” trade—referring to heavy assets with low obsolescence—is currently a focal point for institutional investors looking to capitalize on capital-intensive industries like telecommunications.
Rheinmetall and the European Rearmament Drive
German defense manufacturer Rheinmetall remains a conviction pick with a projected 102% upside. The company saw a 15.1% gain in July, supported by strong second-quarter financial results. Goldman analysts describe the stock as “significantly undervalued,” noting that Rheinmetall is structurally positioned to benefit from the ongoing rearmament efforts across Europe. This outlook relies on the firm’s sustained order backlog and its role as a primary supplier for regional defense modernization.
Strategic Potential in Logistics and Telecom
Goldman Sachs also maintains a 64% upside forecast for both DSV and BT Group. For the Danish logistics provider DSV, the outlook remains positive despite a 9.3% share price drop in July. While road profitability remains a concern, analysts point to the integration of DB Schenker and strong airfreight volume growth—which rose 10% year-on-year—as primary drivers for future performance. Meanwhile, BT Group is viewed as a beneficiary of the HALO trade, with the company’s fiber monetization strategy expected to drive long-term gains for the London-listed telecom firm.
ASML: Beyond the AI Narrative
ASML has been added to the Goldman “European Conviction – Directors’ Cut” list, with analysts eyeing a 52% upside. Although the Dutch semiconductor firm shed 7.2% in July due to market jitters regarding AI valuations, Goldman argues that the company’s revenue is not solely dependent on AI. Because ASML holds a unique position in the semiconductor value chain, analysts conclude the firm is capable of capturing capital expenditure regardless of which specific applications drive the next cycle of chip investment.
Pro Tip: Evaluating Conviction Lists
When reviewing investment bank conviction lists, focus on the “why” behind the price target. Analysts often differentiate between short-term market sentiment—such as the recent AI-driven volatility—and long-term structural demand, like defense spending or semiconductor manufacturing requirements.
Frequently Asked Questions
- What is the “European Conviction – Directors’ Cut” list?
It is a curated monthly selection of European stocks identified by Goldman Sachs analysts as having significant 12-month upside potential based on fundamental analysis. - Why did Ceres Power shares fall in July?
The stock declined 31% due to investor concerns regarding supply chain durability, project execution, and the longevity of AI-related hardware demand. - Is ASML’s growth only tied to AI?
No. Goldman Sachs analysts state that ASML’s revenue is diversified across the entire semiconductor value chain, allowing it to capture spending across various chip-intensive applications.
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