European Tech and Banking Stocks Drive Large-Cap Gains in May

ASML, Adyen and Infineon saw double-digit rises in their share prices as markets rebounded.

Fernando Luque 4 June, 2025 | 8:43AM
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Illustratie in de vorm van een collage met een euromunt, een tableau met een positieve trend in de markt en een gebouw voor werknemers.

Key Takeaways

  • Large-cap growth, mid-cap value and small-cap value stocks rise more than 7% in May
  • Technology the best performing sector
  • Banks lead large-cap value stocks
  • Small-cap value stocks the most undervalued

The Morningstar Europe Index rose 4.9% in May, its best month since January 2025 as tech stocks led the market recovery, and is up nearly 10% in the year to date. Positive returns were seen across all segments of the Morningstar Style Box, but the performance of the index was held back by large-cap blend stocks.

Within the large-cap segment, the growth style was the biggest winner, rising 7.1% in euros thanks to strong gains by companies such as semiconductor firm ASML Holding ASML, which rose 12.3%, defense stock Rheinmetall RHM, up 26.3%, and power company Siemens Energy ENR, which rose 26.6%. For the year to date, large-growth stocks are up 15.9%, while large-value stocks are 16.2% ahead.

The relative underperformance of large-blend companies is partly due to stocks such as Sanofi SAN, which lost 4.7%, and LVMH MC, which declined 2.0% in euros.

At the sector level, technology was the most profitable last month, with an 8.65% increase in euros. Not only did ASML rise strongly, but so did stocks such as payments processor Adyen ADYEN, which rose 19.2%, and semiconductor firm Infineon Technologies AG IFX, which gained 18.6%.

European Banking Sector Outperforms

The large-value segment also achieved above-market returns, rising 5.8% in euros, thanks mainly to the banking sector. The three stocks that contributed most to the positive performance of this market segment were three large banks: Banco Santander SAN, which rose 13.7%, HSBC HSBA, up 7%, and BNP Paribas BNP, which gained 10.3% in euros. Overall, the European financial services sector outperformed the market in May, with a gain of 6.40%.

The consumer defensive sector was the worst performer, which only gained 1.73% in euros. This sector was heavily weighed down by declines in stocks such as L’Oreal OR, which fell 2%, Imperial Brands IMB, which lost 6.3%, and Diageo DGE, which fell 2.5%.

European Small-Cap Value Stocks the Most Undervalued

In terms of valuation, the small-value style remains the most undervalued within all segments with a price/fair value of 0.75 at the end of May. Following the latest outperformance, the large-growth style was the most overvalued, with a price/fair value of 1.03; this is a change from the valuation at the end of April, when large-cap growth stocks were screening as slightly undervalued.

Mid-growth stocks are now undervalued, but were undervalued at the end of April, with a price/fair value of 1.07.

Of the nine Morningstar Style Box segments, seven are undervalued at the end of May and two are overvalued.

A price/fair value below 1 means that the stock is undervalued, while a price/fair value above 1 indicates that the stock is overvalued.

Biggest Changes in Morningstar Fair Value Estimates for European Stocks

In May, the largest increases in fair value in percentage terms were for BAE Systems BA. from £15.50 to £22.50, NatWest Group NWG, from 360p to 480p, Intesa Sanpaolo ISP, from EUR 3.50 to EUR 4.50, and Generali G, from EUR 25.05 to EUR 30.00.

The biggest downward revisions in fair value were for BASF BAS, from EUR 60 to EUR 56, Novo Nordisk NOVO B, from DKK 640 to DKK 595, and Mercedes-Benz Group MBG, from EUR 106 to EUR 90.


The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Fernando Luque

Fernando Luque  is Senior Financial Editor at Morningstar Spain 

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