- European defence stocks have seen a remarkable 46% rise year-to-date, while the US Magnificent 7 have dropped 8%
- Key players like Rheinmetall and Rolls-Royce have surged in share price amid expectations for European governments to ramp up defence spending
- The tables are turned as Europe outperforms the US, with the STOXX 600 up 9% and S&P 500 down 2% so far this year
10 March, 2025: As America’s Magnificent 7 tech firms struggle, Europe’s leading defence stocks are outperforming this prestigious group as well as the broader US and European stock markets, according to analysis from trading and investing platform eToro.
The Magnificent 7, which consists of US tech megacaps Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla, have been considered some of the best performers in the global stock market, gaining 63% in 2024 alone.1 Yet their dominance is now being questioned, as the group has slumped 8% since the start of 2025.
As investors seek to diversify into other regions and sectors, Europe’s defence industry has caught attention with its recent blistering rally. eToro created a basket of seven leading European defence stocks – BAE, Rolls-Royce, Rheinmetall, Thales, Dassault Aviation, Safran, and Leonardo – and found that this group has risen 46% year-to-date, 65% over the past year, and 268% over the past five years.
This means the ‘European Defence 7’ has not only beaten the US Magnificent 7, but also the US and European stock markets across the same time periods. Over the past year, the defence basket generated five times the returns of the S&P 500 and nearly six times that of the STOXX 600.
Table 1 – Performance of the US Magnificent 7, European Defence 7, and GRANOLAS against regional stock market indices
| YTD | 1 year | 3 years | 5 year | |
| US Magnificent 7 | -8% | 21% | 66% | 227% |
| European Defence 7 | 46% | 65% | 245% | 268% |
| GRANOLAS | 12% | 8% | 32% | 58% |
| S&P 500 | -2% | 13% | 39% | 99% |
| STOXX 600 | 9% | 11% | 31% | 50% |
Source: Refinitiv as of 5 March, 2025.
Past performance is not a reliable indicator of future results
Commenting on the data, Lale Akoner, Global Market Analyst at eToro said: “With Trump’s administration suspending military support for Ukraine, European leaders have been compelled to take matters into their own hands and form a peace deal. Governments across the continent have pledged to raise defence spending, while the European Commission has unveiled a rearmament plan. Along with persistent geopolitical tensions, these conditions have created a perfect storm for Europe’s defence sector, as the region will now be more reliant on its own contractors. Investors should keep an eye on whether these plans and pledges materialise into concrete funding and expenditure in the coming months.”
Within the European Defence 7 basket, Germany’s Rheinmetall has shown the most impressive growth, surging 82% year-to-date, and over 13 times in just five years. BAE, Britain’s biggest weapons maker, climbed 36% year-to-date as it reported record orders and profits last month, while Rolls-Royce also rose 34% after posting strong full-year earnings.
In a notable reversal, the European equity market is surpassing the US’s so far this year. The STOXX 600 is up 9%, whereas the S&P 500, which had long been the global frontrunner, is down 2%. The ‘GRANOLAS’ stocks, a diverse basket comprising eleven of Europe’s most valuable public firms (GSK, Roche, ASML, Nestle, Novartis, Novo Nordisk, L’Oreal, LVMH, AstraZeneca, SAP and Sanofi) has also overtaken the US Magnificent 7 with 12% growth so far this year.
Lale Akoner, Global Market Analyst at eToro continued: “Over the past 5 years, investors have grown used to US big tech being top of the class, but all this could change. The Magnificent 7 stocks are showing signs of overvaluation. Lacklustre earnings reports, a looming trade war and mounting competition from China have all weighed on their performance so far in 2025. As a result, investors are increasingly diversifying away from these tech giants, exploring opportunities in sectors like defence, finance, and healthcare, as well as other regions like Europe.”
Table 2 – Share price performance of stocks in the European Defence 7
| Stock | Market cap
(EUR bn) |
YTD | 1 year | 3 years | 5 years |
| Rheinmetall | 49 | 82% | 161% | 655% | 1,316% |
| Thales | 46 | 74% | 68% | 108% | 146% |
| Leonardo | 28 | 66% | 115% | 476% | 412% |
| Dassault Aviation | 21 | 42% | 50% | 112% | 195% |
| BAE | 56 | 36% | 26% | 127% | 163% |
| Rolls-Royce | 80 | 34% | 110% | 772% | 290% |
| Safran | 107 | 21% | 32% | 163% | 121% |
Source: Refinitiv as of 5 March, 2025.
Past performance is not a reliable indicator of future results
**ENDS**
Notes to Editors
eToro’s European defence basket was constructed with an equal-weight index of seven leading defence firms in Europe. Share price performance data rounded up to the nearest whole number. Data was taken from Refinitiv on 5 March, 2025.
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