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Investing.com -- JPMorgan set out a broadly constructive 2026 view for European tech hardware and payments, highlighting a coming multi-year upturn in semiconductor equipment, selective pressure in device makers, and improving setups for names with AI or structural growth drivers.
The bank’s top picks for the year are ASML, Adyen, and Nokia, each tied to what it sees as the strongest themes in the sector.
JPMorgan analysts expect semiconductor capital equipment (semicap) to be the strongest segment in 2026 as the memory cycle turns decisively upward. DRAM spot prices have surged more than fourfold since September, and it is now “a matter of when and not ‘if’ semi capex spending rises significantly," analysts led by Sandeep Deshpande said.
With clean-room expansion limiting how quickly producers can add capacity, the Wall Street firm anticipates a multi-year cycle stretching into 2027–28, with ASML positioned to benefit first.
Orders at the Dutch group should rise notably in late 2025 and through 2026, backed by memory-driven demand, while ASMI, VAT Group, and BE Semiconductor are seen joining the upturn later in the cycle.
On the other hand, semiconductor device makers continue to face an overhang from elevated auto and industrial inventories. JPMorgan notes inventory levels at 166 days in the third quarter, roughly 46 days above the “new normal,” which it expects will keep margins under pressure until late 2026.
The auto market is weighed down by tariff-related price headwinds, the removal of U.S. EV tax credits and softening China demand. Infineon remains the relative preference due to its AI power exposure, but the bank stays Neutral on most of the group and downgrades ams-Osram to Underweight.
In communications equipment, the analysts argue that radio access spending will stay flat until the 6G cycle later in the decade. Ericsson’s cost focus and potential buyback support sentiment, but Nokia stands out as JPMorgan’s preferred idea for 2026.
The company’s Optical and IP Networking units give it meaningful exposure to AI infrastructure, and guidance for 10–12% growth in these businesses could allow earnings to rise by mid-teens percentages.
"If the company achieves these growth aims, the stock has considerable upside with a multiple re-rating likely," the analysts wrote.
Payments remain a mixed landscape going into next year. JPMorgan keeps Adyen as its top pick, placing the stock on Positive Catalyst Watch and pointing to a cleaner earnings setup after the exit of CashApp-related volumes and more conservative medium-term guidance.
The analysts said the company has “plenty of runway and levers for future growth.”
Meanwhile, Nexi is expected to see weak early-2026 trends before stabilising, while Worldline faces significant dilution from an upcoming equity raise. Wise remains Overweight, with the U.S. listing expected to revive investor interest.