JPMorgan Projects Strong Growth for European Tech Hardware and Payments in 2026

Key Points Summary:

• JPMorgan has a positive outlook for European tech hardware and payments in 2026, focusing on a multi-year upswing in semiconductor equipment and selective growth among device manufacturers.

• Their top investment recommendations include ASML, Adyen, and Nokia, aligning with strong sector trends, particularly in semiconductor capital equipment and AI infrastructure.

• Challenges persist for semiconductor device makers due to high inventory levels and market pressures, particularly in the automotive sector.

JPMorgan has released an optimistic forecast for European technology hardware and payments in 2026, anticipating a multi-year recovery in semiconductor equipment, selective strength among device manufacturers, and enhanced prospects for companies driven by artificial intelligence or structural growth catalysts.

The bank’s prime investment picks include ASML, Adyen, and Nokia, which are aligned with what analysts deem as key growth themes within the sector. The firm expects semiconductor capital equipment (semicap) to emerge as the strongest segment in the coming year, spurred by a notable resurgence in the memory cycle. Analysts led by Sandeep Deshpande noted that DRAM spot prices have soared more than fourfold since September, underscoring the imminent rise in semiconductor capital expenditure.

With clean-room expansion curtailing production capacity increases, JPMorgan forecasts a prolonged cycle extending into 2027-28, positioning ASML to be one of the first beneficiaries. Expectations for a significant uptick in orders for the Dutch company are set for late 2025 through 2026, driven by demand linked to memory technologies. Other companies, such as ASMI, VAT Group, and BE Semiconductor, are likely to witness an upturn later in the cycle.

Conversely, semiconductor device manufacturers are grappling with the aftermath of high automobile and industrial inventories. JPMorgan highlights that inventory levels reached 166 days in the third quarter, significantly exceeding the anticipated "new normal" by 46 days. This overhang is expected to suppress margins until late 2026. In the automotive sector, various factors, including tariff-induced price increases, the elimination of U.S. electric vehicle tax credits, and weakening demand in China, continue to exert pressure. Despite this, Infineon remains favored due to its exposure to AI technologies, while the bank adopts a Neutral stance on most device makers and downgrades ams-Osram to Underweight.

In the communications equipment segment, the analysts predict stagnant radio access spending until the onset of the 6G cycle. Although Ericsson's cost management and potential share buybacks may foster positive sentiment, Nokia stands out as JPMorgan’s preferred investment for 2026. With significant exposure through its Optical and IP Networking divisions, Nokia is projected to achieve 10-12% growth, potentially elevating earnings in the mid-teens percentage range. Analysts assert, "If the company achieves these growth aims, the stock has considerable upside with a multiple re-rating likely."

The payments landscape appears more nuanced heading into the new year. JPMorgan continues to endorse Adyen as its leading choice, placing the stock on Positive Catalyst Watch due to a cleaning up of earnings after the departure from CashApp-related volumes and more cautious medium-term guidance. The bank notes that Adyen has “plenty of runway and levers for future growth.”

However, Nexi is forecasted to experience weak trends in early 2026 before stabilizing. Meanwhile, Worldline is expected to face significant dilution from an upcoming equity raise. In contrast, Wise remains rated Overweight, bolstered by the anticipation of renewed investor interest with its U.S. listing.