European Capital Goods: J.P. Morgan Overweight Sector Thesis & Strategy Alignment

J.P. Morgan reiterates its Overweight stance on European Capital Goods, driven by a long-lasting policy-supported capex cycle focusing on security, resilience, and infrastructure catch-up. Early signs of operational acceleration in Q2 and recovering PMIs are not yet reflected in the sector's historically discounted relative valuations.

Key Takeaways

• 1.Europe is transitioning from an efficiency model toward security, resiliency, and strategic autonomy, driving a durable, policy-supported capex cycle across energy, defense, digital infrastructure, and industrial capacity.
• 2.PMIs and Q2 corporate earnings demonstrate sequential growth acceleration across electrical equipment and industrial automation, yet sector valuations remain at an unprecedented relative discount.
• 3.Physical infrastructure is the most investable layer across key strategic themes, with top multi-theme beneficiaries including Siemens AG (exposed to 5 of 7 themes) and Siemens Energy (3 of 7 themes).

Table of Contents

• OW Sector Thesis and Strategy Theme Alignment
• Important Disclosures
• Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe
• Other Disclosures

Report data

Table 1: EU Capital Goods – Positioning Across Strategic Investment Themes — as of August 14, 2026.

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