Goldman Sachs has singled out two very different European companies — clean-energy developer Ceres Power and defense contractor Rheinmetall — as its top stock picks, projecting 168% and 102% upside respectively over the next 12 months. The calls come as the Stoxx 600 closed at a record high of 656.86 points, up 0.7%, and have gained 10% in 2026. UBS raised its year-end target to 690, implying about 5% additional upside.
Ceres Power: A Licensing Play on Data Center Growth
Ceres Power shares fell more than 31% in July, but Goldman views the decline as an entry point. The bank points to the company's licensing model and its exposure to data center growth as key drivers. The projected 168% upside is the highest among the picks.
Rheinmetall: Defense Contractor Beats Estimates
Rheinmetall gained 15.1% in July after beating Q2 estimates. Revenue rose about 69% to 3.289 billion euros, and operating profit hit 562 million euros against expectations of nearly 470 million. The company is scheduled to publish detailed first-half results on Thursday, which will test Goldman's 102% upside projection.
Other Goldman Picks: BT Group and DSV
Goldman also forecasts 64% upside for BT Group, citing fiber monetization, and for DSV, citing the DB Schenker integration. DSV shares fell 9.3% in July.
ASML Added to Conviction List
ASML was added to Goldman's European Conviction Directors' Cut list with a projected 52% upside. Analysts cite AI as a structural demand driver and ASML's diversified revenue base.
Market Context: Stoxx 600 Record and Semiconductor Cool-Down
The Stoxx 600's record close caps a strong run. Semiconductor names led the market earlier this year: Soitec up 371% and AT&S up 330% year-to-date, but they have since cooled. AT&S and Aixtron each fell more than 20% from their mid-June peaks. Morningstar strategist Michael Field noted that cash is committed to capex and semiconductor firms are seeing the benefit of this spending.
Rheinmetall's detailed first-half results on Thursday will be the first real test of Goldman's 102% upside projection.
