eToro highlights rising investor interest in European defense stocks
eToro data reveals investor sentiment change
Leading global trading platform eToro has reported a sharp shift in investor sentiment: at the start of 2025, European defense stocks are outperforming U.S. tech giants in terms of returns.
The once-dominant group of America’s “Magnificent Seven”—Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia, and Tesla—has fallen by 8% since the beginning of the year, raising doubts about their continued market leadership.
Rising interest in Europe’s defense sector
According to eToro’s latest analysis, European defense companies are emerging as new growth drivers amid geopolitical instability and rising defense budgets across the region. In response to changing investor interest, eToro has created a basket of seven leading European defense stocks—BAE, Rolls-Royce, Rheinmetall, Thales, Dassault Aviation, Safran, and Leonardo—calling it the “European Defence Seven.”
Since the beginning of 2025, this group has delivered impressive results: up 46% year-to-date, 65% over the past year, and 268% over the last five years.
Top performers and eToro’s market insights
According to eToro, the performance of this basket has significantly outpaced not only the weakening Magnificent Seven but also broader benchmarks such as the S&P 500 and STOXX 600. Over the past year, the defense basket delivered nearly five times the returns of the S&P 500.
Germany’s Rheinmetall has shown the strongest growth, with its shares up 82% this year and an astonishing 1,316% over the past five years. British firms BAE Systems and Rolls-Royce also delivered solid gains—up 36% and 34%, respectively—driven by record orders and strong financial results.
eToro’s Global Market Analyst Lale Akoner attributes the trend to shifting geopolitical dynamics. “The reduction of U.S. military aid to Ukraine and the increase in European defense spending are creating a favorable environment for the defense sector,” she noted.
European markets gain momentum
Furthermore, broader European markets are also outperforming the U.S.: the STOXX 600 is up 9% year-to-date, while the S&P 500 has declined by 2%. eToro also highlights that the “GRANOLAS” basket (top European firms such as Roche, Nestlé, and ASML) has grown 12%, surpassing the U.S. tech leaders.
As eToro notes, 2025 could mark a turning point in global financial market leadership. Investors are increasingly diversifying beyond tech, shifting toward defense, healthcare, and European markets.
It is worth noting that eToro recently announced the addition of Abu Dhabi Securities Exchange (ADX)-listed stocks to its platform.
