Foreign Stocks: Fallen Favorites and New Opportunities

After spectacular gains, semiconductor and energy stocks have recently come under pressure. Investors are now selectively seeking out stocks with long-term growth drivers—ranging from AI infrastructure to climate technology.

July 23, 2026. FRANKFURT (Deutsche Börse). The stock markets have seen a clear shift in favorites in recent weeks. An analysis of all stocks currently listed on the STOXX Europe 600 illustrates this. Of the 25 top-performing stocks in the first five months of this year, 17 have posted negative returns since the end of May. Ten stocks have lost double-digit percentages of their value. The performance of Soitec stock (FR0013227113) is particularly striking. The manufacturer of innovative semiconductor materials saw its share price rise by 666 percent from the beginning of 2026 through the end of May. In June, the stock was added to the benchmark index. Since the end of May, the share price has fallen by over 40 percent.

Semiconductor Rally Loses Steam

The situation is currently similar for many stocks in the semiconductor and memory solutions sectors. “After the sharp gains, the sector seems to have run out of steam somewhat in the short term,” explains Marc Richter, Head of Equity Order Book Management at Steubing AG. Following a period of consolidation, these stocks could potentially regain momentum relative to the market in the next cycle. However, the elevated valuations will need to prove themselves again in the upcoming earnings season, as many stock prices have, in some cases, outpaced the underlying fundamentals.

Aside from the much-discussed companies, the trader highlights Asustek Computer (US04648R6053), a Taiwan-based provider of PCs, motherboards, graphics cards, and, increasingly, complete AI server and infrastructure solutions. “The company is benefiting from high demand for AI hardware and recently expanded its collaboration with Nvidia in the area of AI platforms.” The company’s server revenue tripled in the first quarter compared to the previous year. Despite the consolidation of the past few weeks, the long-term upward trend remains intact, according to Richter. Since early March, the stock has still gained about 30 percent on the Frankfurt Stock Exchange.

Correction Risks Not Yet Averted

The strategy team at the independent asset management firm DJE warns that the risk of a correction in the semiconductor sector remains in the short term. “There is growing discussion in the market about whether the extreme shortage of computing power is easing and whether technological advances could change capacity requirements.” The experts see further risks in slowing earnings momentum in the semiconductor sector and rising costs for AI applications. The latter could lead companies to curb their spending more sharply. “That could slow demand for specific applications.”

Many stocks in the oil and gas sector have already rebounded significantly. Richter cites Vallourec (FR0013506730>) as an example. The manufacturer of seamless steel pipes and specialty pipe products for industrial applications primarily supplies its products to the oil, gas, and petrochemical industries. Since the beginning of the year, the stock is up by a good 30 percent, although the price has lost a quarter of its value since its high in May. “The strong revaluation at the beginning of the year was supported by successful operational restructuring, a significantly improved balance sheet, and strong cash flow generation,” explains the Steubing trader.

Heat Wave Puts Daikin in the Spotlight

Another topic of discussion on the stock markets is the latest heat wave. More and more households are considering installing air conditioning, and politicians are already calling for the launch of an emergency program worth billions to provide general protection against the heat. Jonathan Neuscheler of Abilitato GmbH believes that Japan’s Daikin Industries (JP3481800005) could benefit from this trend. According to him, shareholder value is increasingly taking center stage at the world’s largest manufacturer of air conditioning and refrigeration equipment. The management board plans to increase the EBIT margin, as well as implement share buybacks and raise the dividend. Despite a fairly ambitious valuation, the value investor draws a positive conclusion: “There’s no question that a P/E ratio of 21 (2027e) doesn’t exactly point to a bargain. On the other hand, however, there are very few blue-chip companies that we believe are capable of delivering annual earnings growth of 7.0 percent.”

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