New research from KPMG International is urging banks and retailers to form strategic partnerships—or risk falling behind—as businesses attempt to keep up with the rapid pace of change in the payments space.

The report, Partnering for payment modernization by KPMG International, includes responses from 500 banks and 500 retailers to assess their progress on payment modernization. It identifies that while costs are high and modern technology continues to disrupt; a better ecosystem of partnerships between banks, retailers, technology providers and regulators can help improve operations and enhance the payments experience for customers.

The survey reveals that 54 percent of retailers believe that payment modernization is crucial to the future of their business, including delivering major efficiency and operational gains. However, just over half (53 percent) of retailers believe that their banks understand their payment modernization goals, with 45 percent saying their banks are proactively delivering payment solutions tailored to their needs. With the average retailer planning to increase modernization budgets by 2.5 percent over the next year, there is scope for more cohesion and development in the area. Banks don’t disagree, with 51 percent believing that the future winners in payments will be those with the best ecosystems. 60 percent of banks also indicate an increase in spending this year, with 21 percent reporting expected increases of five to nine percent over their existing budgets.

Furthermore, it was found that common goals across both sectors include the replacement of legacy payment infrastructure, enhancing fraud prevention and meeting customer expectations. High implementation costs and budget constraints were noted as the top barrier for those starting out on their payment journey (66 percent in banking and 69 percent in retail), while 62 percent in the banking sector also noted outdated legacy infrastructure and technical debt as a major frustration. As they mature their payments modernization capabilities, each sector highlighted meeting customer demand as the main concern (41 percent of banking leaders and 35 percent of retail leaders).

Isabelle Allen, Global Head of Consumer, Retail and Leisure at KPMG International, said: “The quest by consumers for ever faster, lower friction and more secure payment options is relentless and fueling innovation and disruption. Banks and retailers cannot afford to work in isolation or indulge in traditional vendor-customer relationships. The future of payments will likely be defined by a broader ecosystem which extends beyond banks and retailers, to include technology providers, regulators, fintech startups and consumers themselves. Success should be measured by the way companies access new technologies, reduce costs, share expertise, fill skill gaps, accelerate time to market, and mitigate risks.”

Investing in the future of payments

The importance of modernizing payment systems is reflected in the level of capital now being channeled into these programs. The data indicates that banks spent an average of US$96.9 million on payment modernization over the past fiscal year, demonstrating the magnitude of the transformation underway across the industry. Full-service and corporate banks lead the investment charge, allocating US$151.1 million and US$146.7 million, respectively.

On the retail side, hypermarkets and warehouse clubs report the highest levels of investment due to their high-volume, low-margin models, which rely on fast, efficient checkout processes. Online retailers also invest heavily to support their digital business models. At the same time, more traditional segments (such as department and specialty stores) invest less, likely reflecting limited budgets and customer preferences. Some of the biggest increases over the next year will be invested by those seeking to catch up; department and discount stores will boost spending by over three percent, while supermarkets are targeting increases of nearly four percent.

Modern technology is a key disruptorThe report highlights the length to which modern technology, mainly AI and digital currencies, are disrupting payments systems and processes. It states that in three years, the lion’s share of banks will be using AI-enabled biometrics to secure payments and agentic AI to process transactions autonomously. AI is also expected to catapult fraud detection to new levels, with 85 percent of banks saying they will turn to AI for instant risk resolution. Seventy-eight percent of respondents also noted the use of behavioral and contextual data to create personalized services, and 71 percent noted that extracting insights from payment data for pricing and liquidity decisions will be the top AI uses that will grow the fastest over the next three years.

In addition, 60 percent of banks are currently upgrading core systems to support programmable money and digital ledgers, with 76 percent looking to do this over the next three years. The banking industry will also focus much of their attention on using Central Bank Digital Currencies (CBDCs) for atomic settlement for SMEs, alongside efforts to establish stablecoin and token fintech platforms.

Harnessing regulatory shifts

Rather than viewing compliance as a cost or constraint, the report finds that leading retailers are harnessing regulatory shifts to advance their growth strategies. Seventy-nine percent of the leaders (versus 37 percent of those just beginning their modernization journey) say they collaborate with regulatory bodies to help shape effective regulations that foster innovation. Leaders are also highly focused on implementing a range of payments regulations. They are particularly ahead of beginners in anti-fraud regulations and those for new payment types, such as digital wallets and BNPL (Buy Now, Pay Later). The data also suggests they are making more progress meeting international standards such as ISO 20022.

Geoff Rush, Global Head of Banking and Capital Markets at KPMG International, said: “With the rise of digital currencies, it is increasingly clear that the future of payments lies in dynamic and value-driven ecosystems and partnerships — banks, fintechs, retailers and tech companies, for example — where banks play a key orchestration role in providing a variety of services on top of advanced technology and modern payment infrastructure. Such alliances amongst these sectors should be encouraged by shared goals around operational efficiency, fraud prevention and regulatory compliance. The big question is, who will be the first to tie up some of these strategic partnerships and really differentiate themselves?”

The post Why Strategic Partnerships Set to Reshape Payments Industry Says KPMG appeared first on European Business & Finance Magazine.

Quick Answer: Life insurance has become the engine powering private capital’s expansion into credit markets. Firms like Apollo, Blackstone, and KKR use policyholder premiums to fund lending operations, profiting from the spread between what they earn on investments and what they owe policyholders. But as newcomers pay increasingly aggressive prices to enter the market — exemplified by Aquarian Capital’s $4.1 billion acquisition of Brighthouse Financial — regulators and industry veterans are warning that the model’s risks are growing faster than its safeguards.

The trade that built modern private capital is deceptively simple. Buy a life insurer. Take control of the investment portfolio backing its policyholder obligations. Redirect that capital into higher-yielding private credit — direct loans, structured finance, asset-backed securities — and pocket the difference between what the investments return and what the insurance liabilities cost. The policyholder gets their annuity or pension payment. The asset manager keeps the spread.

Apollo Global Management pioneered this model when it merged with its insurance arm Athene in 2022, creating what has since become the template for an entire industry. Athene provides Apollo with permanent capital — roughly $300 billion in assets that do not need to be fundraised, do not face redemption windows, and do not depend on investor sentiment. Instead, they flow in steadily as Americans buy annuities, roll over pensions, and plan for retirement. Apollo’s asset management division then deploys that capital into the private credit opportunities it originates, creating a closed loop: insurance funds lending, lending generates returns, returns service insurance obligations, and the spread is profit.

The model has been extraordinarily successful. Apollo’s assets under management have grown to nearly $1 trillion. Its retirement services division, powered by Athene, accounted for a significant share of the firm’s earnings in 2025. Competitors noticed. Blackstone acquired a majority stake in Everlake (formerly Allstate Life Insurance) and built its own insurance-backed lending platform. KKR acquired Global Atlantic for $12 billion. Brookfield took over American National Insurance. Ares, Carlyle, and a growing list of mid-tier firms followed, each seeking the same prize: a captive pool of long-duration capital that could be invested in illiquid, higher-yielding assets without the constraints of traditional fund structures.

Life insurance has become, in effect, the lifeblood of the private capital industry — the source of cheap, stable funding that makes the economics of private credit work at scale.

The Aquarian Question

The Brighthouse Financial deal crystallised the anxiety that has been building across the industry for months. Aquarian Capital, a New York-based holding company backed by Abu Dhabi’s Mubadala sovereign wealth fund and RedBird Capital Partners, agreed in November 2025 to acquire Brighthouse for $4.1 billion — roughly $70 per share in an all-cash transaction. Brighthouse, spun off from MetLife in 2017, carries more than $230 billion in promises to policyholders and other liabilities. It had reported net losses, struggled with stagnating annuity sales, and was widely considered a complex and troubled asset.

Apollo and Carlyle had both examined the deal and walked away. Other asset managers who independently valued Brighthouse came up with figures roughly half what Aquarian paid. One senior executive who reviewed Aquarian’s investor presentation described the reaction as unanimous horror. Aquarian’s thesis was essentially to take the Apollo playbook and accelerate it — use Brighthouse’s enormous liability base to fuel a lending and investment operation, profiting from the spread at a scale that justified the premium.

Brighthouse shareholders approved the merger in February 2026. Regulatory approvals are pending. The deal is expected to close later this year.

The concern is not that the model itself is flawed. Apollo has operated it profitably for years, with $34 billion in regulatory capital at Athene and a track record of matching assets to liabilities. The concern is what happens when the model is replicated by firms with less experience, thinner capital buffers, and greater appetite for risk — firms arriving late to the insurance-backed credit trade and paying increasingly aggressive prices to get in.

The Systemic Question

The Bank for International Settlements published research estimating that publicly traded North American life insurers would face a capital shortfall of approximately $150 billion if their portfolios were marked to market under stress conditions. The finding underscored a structural issue: private credit assets held by insurers are inherently harder to value, less liquid, and more opaque than the government bonds and investment-grade corporate debt that life insurers traditionally held.

Regulators have responded, though slowly. The National Association of Insurance Commissioners introduced new rules in 2026 increasing capital charges for certain categories of private credit held by affiliated insurers. State regulators in New York and Virginia have raised concerns about the more permissive capital treatment offered by Iowa, where several private equity-affiliated insurers are domiciled. And the question of related-party investments — where insurers invest in assets originated by their own parent companies — remains deeply contentious. Athene holds roughly 12% to 18% of its assets in related-party investments, depending on how the calculation is performed. Some competitors hold significantly more: KKR’s Global Atlantic at 22%, Brookfield’s American National at 30%, Blackstone’s Everlake at 35%.

UBS chairman Colm Kelleher has publicly warned of a looming systemic risk in the insurance sector. Apollo CEO Marc Rowan dismissed the claim, arguing that most private credit held by insurers is investment grade and that the hysteria around the asset class is disconnected from the substance. Both men are talking their book. The truth is likely somewhere between them — and the answer depends entirely on what the next credit cycle looks like.

The Stress Test

The insurance-backed credit model does not have a built-in expiry date, but it has a vulnerability that functions like one: if credit losses spike, if interest rates move sharply, or if regulators tighten capital requirements beyond what current portfolios can absorb, the spread that makes the entire model profitable could compress or vanish. And unlike a hedge fund, an insurer cannot simply gate redemptions. It has obligations to policyholders — contractual, regulated, and in many cases guaranteed by state insurance funds.

The executives watching Aquarian’s Brighthouse deal are not worried because one firm overpaid for one insurer. They are worried because the pattern — latecomers paying premium prices for complex insurance liabilities, planning to invest aggressively to cover the cost — is the kind of behaviour that historically precedes a correction.

The private capital industry has built an extraordinary machine. Insurance provides the fuel. Private credit provides the engine. The spread provides the profit. But machines built for calm conditions are tested by turbulence. And the people closest to this one are starting to say, quietly but clearly, that they are nervous — and that they are right to be.

The post Why Private Capital’s Insurance Addiction Is Starting to Crack appeared first on European Business & Finance Magazine.

Something unusual is happening in global capital markets. After years of persistent outflows and chronic underperformance relative to the United States, European equities are suddenly the destination of choice for the world’s biggest investors — and the money is arriving at a pace never seen before.

February 2026 is on track to be the highest month for inflows into European stocks ever recorded. Two consecutive weeks of approximately $10 billion in flows have poured into European equity funds, according to data from EPFR, which tracks ETF and mutual fund allocations globally. The Stoxx Europe 600, the continent’s blue-chip benchmark, has punched through a series of all-time highs this month, closing above 630 for the first time. National indices in the UK, France, Germany and Spain have all hit records of their own. The FTSE 100 crossed the symbolic 10,000 mark for the first time earlier this year. The DAX posted its best annual performance in six years in 2025 and has continued climbing.

The reversal is striking. Between 2022 and 2024, European equity funds experienced persistent net selling, particularly from domestic investors. Cumulative flows over a four-to-five year window have only just turned positive. The fact that they are now accelerating — at record pace — reflects a confluence of forces that is reshaping how global allocators think about risk, value and diversification.

The US Problem

The primary driver is not enthusiasm for Europe. It is anxiety about America.

US equity valuations have stretched to levels that are making even bullish investors uncomfortable. The S&P 500 trades at a price-to-earnings ratio of approximately 27.7, compared with 18.3 for the Stoxx Europe 600, according to London Stock Exchange Group data. The gap is largely explained by the dominance of technology megacaps in US indices — companies whose valuations have been turbocharged by AI enthusiasm but which are now facing growing questions about whether the investment cycle can sustain itself.

Concerns over a potential AI bubble have intensified this year, with several high-profile earnings misses in the US tech sector and growing scepticism about the near-term revenue potential of generative AI applications. That has prompted a rotation out of the concentrated, tech-heavy US market and into regions offering broader sector exposure.

“It’s a lot of global investors wanting to diversify away from an expensive US market,” said Sharon Bell, senior equities strategist at Goldman Sachs. “Europe as an equity market offers a different exposure — there’s less tech.”

That different exposure is precisely the point. European indices carry heavy weightings in banking, industrials, energy, healthcare, defence and consumer goods — “old economy” sectors that benefit from economic recovery, fiscal stimulus and rising defence budgets rather than from speculative momentum around a single technology theme.

The European Recovery Story

The rotation is being reinforced by genuine improvement in European economic fundamentals. Germany, the region’s largest economy, returned to growth last year for the first time since 2022. A recent surge in German factory orders has bolstered confidence that the historic defence spending package announced last year is beginning to permeate the real economy. Bank of America analysts have upgraded German equities to overweight in response.

The eurozone as a whole is expected to grow by around 1.3 per cent in 2026, according to Goldman Sachs forecasts — modest by global standards, but meaningful after years of stagnation. Inflation has cooled significantly, giving the European Central Bank room to maintain a supportive policy stance. Consumer confidence, while still fragile, has stabilised. Corporate earnings growth is forecast at around 5 per cent for 2026 and 7 per cent for 2027, with banks, financial services and European technology companies expected to lead the gains.

Goldman Sachs has lifted its 12-month target for the Stoxx Europe 600 to 625, implying around 8 per cent total return. Citi is more bullish still, with a target of 640 and an expectation of 11 per cent earnings-per-share growth. Both banks point to the same underlying thesis: European equities are not cheap by their own historical standards — they sit in the 71st percentile of their 25-year P/E range — but they are substantially cheaper than almost every other major asset class, and dramatically cheaper than the US.

Who Is Buying

The composition of the inflows matters as much as their size. A significant share of the buying is coming from US-based investors — allocators who spent years overweight domestic tech and are now actively seeking geographical diversification. This is a structural shift rather than a tactical trade. After a decade in which US exceptionalism was the dominant investment thesis, the combination of elevated valuations, concentrated sector risk and political uncertainty under the current administration is prompting a reassessment.

“Investors are essentially scanning the world and asking: where are the cheapest spots? Where are the opportunities?” noted one strategist. For many, Europe — with its valuation discount, sector diversification and improving macro backdrop — is the answer.

Institutional flows into European ETFs confirm the trend. The EURO STOXX 50, STOXX Europe 600 and DAX indices all attracted record ETF inflows in 2025, a pattern that has accelerated into 2026. Cyclical sectors are drawing the bulk of allocations, with industrials, financials and materials leading the way — a clear signal that investors are positioning for economic recovery rather than defensive shelter.

Risks Remain

None of this means European markets are without risk. The continent faces persistent structural challenges: low productivity growth, demographic headwinds, and an industrial base under pressure from Chinese competition and elevated energy costs. The chemicals and automotive sectors remain under significant strain, though these represent a relatively small share of the Stoxx Europe 600’s market capitalisation.

Geopolitical uncertainty also looms. The unresolved conflict in Ukraine, rising US–Iran tensions, and the unpredictable trajectory of US trade policy all have the potential to disrupt the current rally. And some strategists are already warning that the easy gains may be behind us. A Bloomberg poll of 17 forecasters found a median expectation that the Stoxx Europe 600 will finish 2026 roughly where it is now — suggesting the tailwinds have been largely priced in.

But for global investors who spent the past decade overweight a single country, a single sector and a single narrative, the case for European diversification has rarely looked stronger. The money is following the logic. Whether the fundamentals can sustain the flows will be the defining question for European markets in the months ahead.

The post Why Investors Are Pouring Record Sums Into European Stocks — And Leaving Wall Street Behind appeared first on European Business & Finance Magazine.

Asian, European and FX Markets

Asian Pacific stock indices were mostly firmer on Thursday, with investors taking encouragement from a positive session across Wall Street on Wednesday. Chinese markets remained closed for the Lunar New Year break, so there was no trade in Hong Kong or Shanghai. But South Korea’s Kospi reopened and surged over 3% to a fresh record high. Heavyweight tech names, Samsung Electronics and SK Hynix were at the vanguard of the move, with the former adding around 4% on the day. Meanwhile, Australia’s ASX 200 climbed 0.9% and the Japanese Nikkei 225 gained 0.6%. But India’s Nifty 50 was down over 1.6% going into the close on a generalised selloff. This looks like a bout of profit-taking following recent gains and linked to higher oil prices on rising geopolitical tensions across the Middle East, and as India acts against the ‘shadow fleet’ of tankers transporting Russian oil.
In moves which mirror those of their US counterparts, European stock indices peaked early yesterday afternoon and have since retreated. The German DAX, French CAC, Spanish IBEX and Euro Stoxx 50 were all down just under 1% midway through this morning’s session, and the selling accelerated as US stock index futures turned down. The UK’s FTSE 100 was also down, but more modestly, as it pulled back from yesterday’s record closing high. Oil majors, Shell and BP, were both lower in early trade, unable to capitalise on recent gains in the price of crude oil.

The US dollar was steady this morning. This followed a strong session on Wednesday which saw the Dollar Index retest an area of modest resistance between 97.50-97.70 on the cash. Once again, the dollar was negatively correlated to movements across US equities. The greenback bottomed out as US stock indices peaked early yesterday afternoon. The dollar then rallied to close near the day’s highs, while US stock indices pulled back from their best levels. Some strong US data helped. Industrial Production rose 0.7% in January, beating expectations, while core Durable Goods Orders and Housing Starts both surprised to the upside. Further support was provided by the minutes of the Fed’s last FOMC meeting. These were more hawkish than anticipated, with some members suggesting that the Fed’s next interest rate move may be a hike, rather than a cut. Despite this, there was barely any shift in the CME’s FedWatch Tool which continues to price in two 25bp cuts this year, with the first likely to come in June.

US Markets

After a flat and uneventful overnight session, US stock index futures suddenly dipped as European markets opened this morning. The losses weren’t confined to one sector but were broad-based, with all the majors experiencing a modest, but noteworthy, pullback. A scan of equities of major US corporations also suggested that the selloff was general and comes after Wednesday’s positive session. Yesterday, all the US majors posted gains. The tech-heavy NASDAQ rose 0.8%, with the S&P 500, Dow and Russell 2000 up 0.6%, 0.3% and 0.5% respectively. But it’s worth noting that all the majors hit their best levels early in the afternoon and then pulled back later in the day. The Federal Reserve released the minutes of its last FOMC meeting which took place at the end of January. These were viewed as more hawkish than expected, and this added some downward pressure on equities. Some FOMC members indicated a preference for a pause in interest rate cuts, to give more time to see evidence showing that inflation was on a downward trend. Some members had even considered that the next move could be a hike in rates. Meanwhile, Kevin Warsh, President Trump’s preferred choice to replace Jerome Powell as Fed Chair in May, has made it clear he supports further monetary easing. Christopher Waller and Stephen Miran are also supporters of additional rate cuts. Despite the hawkish tinge to the minutes, the CME’s FedWatch Tool was little changed, and continues to show that investors believe there will be two 25-basis point cuts this year, with a strong preference for the first cut coming at the June meeting. Tomorrow sees the latest update for the Fed’s preferred inflation measure, Core PCE. Ahead of this, today sees the release of weekly Unemployment Claims. Retail giant Walmart also reports today, and its results provide an insight into the health of the US consumer.

As far as the major US stock indices are concerned, the bulls may be starting to sweat a bit now, given the S&P 500’s failure to retest and break above resistance at 7,000. The Dow has also retreated from its own record-breaking milestone, as it last traded above 50,000 this time last week. Recent rally attempts have quickly faded as upside momentum ebbs. It may be too early to ‘sell the rips’, but there appears to be a slight reluctance to ‘buy the dips’.

 Commodities and Metals

Crude Oil – Crude oil was firmer in early trade this morning, adding to yesterday’s 4% rally. Front-month WTI managed to push back above $66 per barrel, retesting an area of resistance which held at the end of January. This could be a big test for the bulls. If WTI can make additional gains from here, pushing further above $66 and holding this level on any pullback, then they really will be back in control. This could signal the start of a major breakout and the possibility of a swift move back up to $70 per barrel. The current geopolitical situation certainly appears to support higher oil prices. The fourth anniversary of Russia’s invasion of Ukraine is approaching, with no end to the war in sight. Meanwhile, talks between the US and Iran concerning the latter’s nuclear ambitions are ongoing. Yesterday US Vice-President JD Vance said that President Trump has the right to use force should diplomatic efforts fail to curb Iran’s nuclear ambitions. The US has moved a stack of military assets into the region, and this is unnerving investors. From a bearish perspective, there have been numerous failed upside breakouts over the past four years, and this could simply be another. It’s worth noting that WTI’s daily MACD, while far from being overbought, is certainly at elevated levels. A bit of positive news concerning US-Iranian talks could see any risk premium in the oil price quickly evaporate.

Gold and Silver – Gold had a strongly positive session on Wednesday, bouncing back from Tuesday’s low of $4,850 to edge above $5,000 yesterday afternoon. But it dipped back below here last night, before finding a bid during the overnight Asian Pacific session. This saw it push up above $5,020 this morning before it lost its grip as sellers came back in. Overall, gold continues to consolidate following its parabolic blow-off top, and subsequent plunge. This consolidation is helping the daily MACD to pull back to more reasonable levels, having been very overbought. This looks like a positive development from a bullish perspective. However, the bulls should be concerned that gold has struggled to hold above $5,000 per ounce. While it can certainly bounce from here, there’s also the possibility of another sharp move to the downside.

Silver also had a strong recovery yesterday. It found some modest support around $72 per ounce, and from here it was able to launch a rally which saw it trade up to $79.50 this morning. But it was unable to stage a proper retest of $80, and profit-taking quickly drove it back down to $78. Silver looks vulnerable to further selling, although its daily MACD has dropped sharply into negative territory from extremely overbought levels. It has also started to curl up. This suggests that some upside momentum may be starting to build, which is certainly constructive from a bullish perspective. However, the upside remains vulnerable to any additional dollar strength, which raises the opportunity cost of holding non-yielding assets. Talks between Ukraine and Russia ended without progress, while uncertainty around US–Iran relations remain elevated. David Morrison, Senior Market Analyst at FCA regulated fintech and financial services provider Trade Nation.

The post Global Financial Markets -And Why Europe Is Running Out of Puff appeared first on European Business & Finance Magazine.

Every time Stripe’s valuation ticks upward, the same question resurfaces: when is the IPO? The payments company is now arranging a tender offer that would value it at more than $140 billion, up from $107 billion last autumn and nearly triple the $50 billion low it hit during the 2023 tech correction. The reflex is to read this as a prelude to listing. It isn’t. It’s the opposite.

Stripe isn’t warming up for an IPO. It’s building a permanent alternative to one.

The Tender Offer Playbook

Since achieving profitability in 2024, Stripe has conducted tender offers roughly every six months at steadily increasing valuations. Each round allows employees and early investors to sell shares and access liquidity without the company surrendering the one thing the Collison brothers clearly prize above all else: control.

The mechanics are straightforward. Stripe arranges a buyer pool of institutional investors willing to purchase shares at a set price. Sellers get cash. Buyers get exposure to one of the world’s most important fintech platforms. Stripe stays private. Nobody files an S-1.

At $140 billion, the company would trade at roughly seven times its estimated 2025 gross revenue of $19.4 billion. That’s actually a discount to public peers like Adyen, which remains one of Europe’s most profitable fintechs and trades at a higher multiple. It’s a premium to where Stripe sat 18 months ago, but it’s hardly frothy given the company processed $1.4 trillion in total payment volume last year and is growing revenue at 28% annually.

The point is that every function an IPO traditionally serves — price discovery, liquidity, investor access, employee monetisation — is now being handled through private market infrastructure. The tender offer is the IPO, just without the roadshow, the quarterly earnings calls, and the short sellers.

Why Going Public Makes Less Sense Than Ever

When Stripe co-founder John Collison told Bloomberg at Davos in January that the company was “still not in any rush” to list, it wasn’t a deflection. It was a strategy statement.

Consider what Stripe would gain from an IPO. Access to capital? The company raised $6.5 billion in 2023 and hasn’t needed to raise since. It’s profitable and cash-generative. Brand awareness? Stripe powers payments for Amazon, Google, and Shopify. It doesn’t need a ticker symbol for credibility. Liquidity for shareholders? That’s precisely what the tender offers provide.

Now consider what it would lose. Public companies face quarterly earnings scrutiny that incentivises short-term thinking. They absorb significant compliance and reporting costs — challenges that upcoming EU financial rules are already making harder for fintechs operating across European markets. And they open themselves up to activist investors and market volatility that has nothing to do with business fundamentals. Stripe watched peers like Affirm and Marqeta go public and then spend years trading well below their IPO valuations. The lesson was not lost.

The Acquisitions Tell the Story

What Stripe is doing with its freedom from public markets matters more than the valuation headline. Over the past 18 months, the company has executed a rapid acquisition strategy that would be far harder to pursue under public market scrutiny.

It acquired Bridge, a stablecoin infrastructure platform, for $1.1 billion in late 2024. It bought Privy, a wallet infrastructure company, in mid-2025 and then Valora, a crypto wallet, in December. In January this year, it closed the acquisition of Metronome, a usage-based billing platform designed for AI companies.

Each deal fits a clear thesis: Stripe is positioning itself as the financial infrastructure layer for both the stablecoin economy and the AI economy simultaneously. CEO Patrick Collison said it plainly when announcing the Metronome deal: metered pricing is the native business model for the AI era, and the associated shift in how businesses generate revenue could be bigger than the original rise of SaaS. This mirrors the broader transformation AI is driving across financial services, where infrastructure players are being rewarded for moving fastest.

That kind of long-horizon strategic positioning is far easier when you don’t have analysts asking why margins dipped a quarter after you spent a billion dollars on a crypto company.

The Payments War Stripe Is Quietly Winning

Stripe’s dominance looks even more significant when set against the intensifying battle for control of global payments infrastructure. In Europe, regulators are pushing homegrown alternatives like Wero, which has already scaled to more than 43 million users in an effort to reduce the continent’s dependence on American card networks. The broader push to break away from Visa and Mastercard is reshaping how money moves across borders.

Stripe sits in a unique position within this upheaval. It is American, but it operates as infrastructure that other payment systems — including European alternatives — are built on top of. Whether merchants route transactions through card rails, instant bank transfers, or stablecoins, Stripe wants to be the software layer that makes it all work. That platform-agnostic positioning is why the company can thrive regardless of which payment networks win the geopolitical contest.

The New Template

Stripe isn’t alone in choosing to stay private. SpaceX, Anthropic, and OpenAI have all resisted listing well past the point where previous generations of companies would have done so. But Stripe may be the clearest example of a company that has solved every traditional justification for an IPO without actually completing one.

The $140 billion tender isn’t a step toward the public markets. It’s proof they’ve become optional. For Europe’s fintechs watching from across the Atlantic, the lesson is clear: the most valuable payments company in the world has decided that the best way to build for the long term is to stay answerable only to itself.

The post Why Stripe’s $140bn Valuation Isn’t an IPO — It’s a Strategy appeared first on European Business & Finance Magazine.

What the FCA’s consolidation review means for advice and wealth management firms

Consolidation in the UK advice and wealth management market is no longer a trend to be analysed. It is a structural feature of the sector. Scale has become a practical response to succession planning pressures, rising regulatory expectations and the cost of delivering consistent client outcomes. The FCA acknowledges this reality in its latest review of consolidation across the sector, which has become required reading for firms pursuing growth through acquisition.

What the review also does is reframe the debate. The question is no longer whether consolidation can benefit consumers, but whether firms are governing growth in a way that protects them. The regulator’s findings suggest that, in some cases, commercial momentum has moved faster than the controls needed to support it, particularly where firms lack the data and management information needed to maintain effective oversight. As Joe Norburn, CEO at  TCC Group (TCC, Momenta and Recordsure), explains…

Financial resilience is now a conduct issue

One of the strongest themes in the FCA’s review is prudential resilience. How acquisitions are financed, how debt is structured across groups, and whether stress testing assumptions reflect plausible downside scenarios are all firmly within the regulator’s focus. This emphasis is deliberate. Financial weakness at the group level can quickly trickle down and translate into operational pressure within regulated entities. That pressure can manifest as reduced service continuity, weaker oversight, or cost-driven decision-making – with the impact most likely felt by customers.

The FCA is clearly demonstrating that financial resilience supports the Consumer Duty and should be treated as part of how firms design, finance and govern their growth strategies, not as a separate technical requirement. Firms are expected to move towards continuous, data-driven governance, maintaining consistent oversight as portfolios grow.

As consolidation continues, the regulator expects boards to demonstrate a clear understanding of how growth strategies interact with capital, liquidity and risk appetite, supported by management information and data evidence that demonstrate a reliable, group-wide view of financial and operational risks. Assumptions that may have been workable at a smaller scale are less likely to hold as group structures become more complex.

Governance, culture and the limits of scale

Alongside prudential concerns, the review places sustained emphasis on good governance and culture. Consolidation increases complexity, and with it the risk that weaknesses become harder to identify and harder to challenge.

The FCA highlights that shortcomings in leadership capability, a lack of independent challenge at the board and committee level, and management information that does not provide sufficient, timely insight across increasingly complex group structures can lead to poor outcomes. Without consistent, comparable data on advice quality, and ongoing service standards, senior management cannot exercise meaningful oversight, regardless of the governance structures in place. These are not isolated compliance issues but address the core question of whether senior management can satisfy themselves that the firm is continuing to comply with the Consumer Duty as the firm grows.

Conflicts of interest are another recurring theme. Deferred consideration arrangements, group-wide product strategies and commercial incentives can create tension between growth objectives and customer interests if not actively managed. The regulator expects firms to demonstrate how such conflicts are identified, governed, and mitigated in practice, and how customer interests are protected – supported by clear data trails that evidence decision-making outcomes.

Due diligence and integration: where outcomes are shaped

The FCA’s position on due diligence is unambiguous. A standardised, tick-box approach is not appropriate. Due diligence must be proportionate, risk-focused and tailored to the firm being acquired.

That requires attention not only to permissions and financials, but to advice quality, legacy liabilities, cultural alignment and the target firm’s ability to operate within the acquiring group’s regulatory framework. Weaknesses missed at this stage tend to surface later, during integration, when they are more disruptive and often more costly to address.

The integration itself is treated by the regulator as a critical risk period. Clear plans, adequate resourcing and active monitoring of customer outcomes are expected. Where issues are identified during due diligence, the FCA expects them to be addressed through the integration programme rather than deferred. For firms managing multiple acquisitions, this places a premium on realistic capacity planning, data-led oversight and disciplined execution.

The firms most exposed are not those pursuing consolidation, but those without a clear, repeatable approach to assessing regulatory risk before a deal completes and managing it through integration.

What boards should take from the FCA review

The FCA is explicit that its findings do not introduce new requirements, but they do make clear the expectations on boards, acquirers and senior management teams overseeing complex group structures. The regulator reinforces existing expectations and signals where supervisory attention is likely to focus – doing nothing is not a neutral position as the regulator indicated that it’s ready to intervene where governance, oversight or financial resilience fall short. Firms are expected to benchmark their arrangements against the review and take action where gaps exist.

The good news is that the consolidation itself is not a risk. The risk lies in allowing growth to outpace governance, capital discipline, and operational control; sustainable growth depends on the ability to standardise quality and oversight across the firm’s portfolio. As consolidation programmes scale, firms should embrace technology to enable data-driven decision-making, outcome evidencing and easy access to customer insights, to help improve control while reducing operational drag.

ENDS

The post The UK Wealth Management Merger Wave Isn’t the Risk. Bad Execution Is. appeared first on European Business & Finance Magazine.

Quick Answer: The European Parliament voted on 10 February 2026 to endorse both online and offline versions of the digital euro, clearing a major political hurdle. If legislation passes in 2026, the ECB aims to launch the currency by 2029. The move is designed to reduce Europe’s reliance on Visa, Mastercard and other US-controlled payment infrastructure, which currently processes the vast majority of European card transactions.

The European Parliament has given the digital euro its most significant political endorsement to date. On 10 February, lawmakers voted 443 in favour to back the European Central Bank’s proposal for a central bank digital currency that would function both online and offline — rejecting an earlier attempt by the lead parliamentary rapporteur to restrict it to offline use only.

The vote matters because the ECB cannot issue a digital euro without legislative approval. If the regulation passes through Parliament and the European Council in 2026, the ECB plans to begin testing in 2027 and aims for a first issuance by 2029.

But this is not a payments modernisation project. It is a sovereignty play.

The $24 Trillion Vulnerability

Every time a European consumer taps a card, pays online or transfers money abroad, the transaction overwhelmingly flows through infrastructure owned by American companies. Visa and Mastercard together process approximately $24 trillion in transactions annually. European card and mobile payments run almost entirely through non-European networks — a vulnerability that ECB President Christine Lagarde has described as urgent.

This dependence, explored in depth in EBM’s analysis of Europe’s $24 trillion breakup with Visa and Mastercard, has transformed from a technical inconvenience into a geopolitical risk. Sanctions regimes, trade disputes and US-China tensions have demonstrated how control over payments infrastructure can become a lever of economic power. Brussels no longer views this as a market issue. It views it as a security issue, on par with energy dependence and defence procurement.

What the Digital Euro Would Actually Do

Unlike cryptocurrencies or private stablecoins, the digital euro would be a direct liability of the ECB — state-backed digital cash, not a speculative asset. The framework endorsed by Parliament emphasises several design principles.

Offline functionality is central. The system would allow payments without internet access, replicating the resilience of physical cash during outages, cyber incidents or crises. This was a key area of political debate — the rapporteur Fernando Navarrete had argued for an offline-only version, but Parliament rejected this in favour of the ECB’s full dual-mode proposal.

The currency would be non-interest-bearing and subject to holding caps, designed to prevent deposit flight from commercial banks during times of stress. Privacy protections, particularly for small offline transactions, are intended to replicate the anonymity of cash — a deliberate contrast with surveillance-heavy CBDC models being developed elsewhere.

By providing a public, neutral settlement layer, the ECB hopes to reduce merchant fees, lower barriers for European payment providers and preserve access to state-backed money in a digital economy increasingly dominated by private platforms.

The Fintech Dimension

The digital euro does not exist in isolation. It sits alongside a broader European push to reclaim control over payment rails. The European Payments Initiative — backed by 16 major banks — has already launched Wero, a pan-European digital wallet covering 130 million users across 13 countries. Meanwhile, European fintechs are building alternative payment infrastructure that bypasses card networks entirely through instant bank-to-bank transfers.

In parallel, a consortium of 11 European banks is developing a euro-backed stablecoin designed to compete with dollar-denominated stablecoins that currently dominate the crypto payments market. S&P Global Ratings estimates the euro stablecoin market could grow from €650 million to €1.1 billion by 2030.

These initiatives — digital euro, Wero, euro stablecoin — represent a coordinated, if not always perfectly aligned, effort to ensure that when money becomes software, Europe retains control of the code.

The Resistance

The path to 2029 is far from clear. German banking lobbies resisted the project for more than two years, delaying progress far beyond the ECB’s original timeline. Commercial banks worry that a digital euro could cannibalise deposits, undermining a funding model that underpins Europe’s broader financial system.

Some lawmakers remain sceptical. German MEP Markus Ferber has argued that the digital euro risks becoming a political prestige project rather than a response to genuine consumer demand. The far right opposes it, and support within centrist parties remains divided. Building a legislative majority will require continued compromise on privacy, bank protections and the scope of the currency’s use.

There is also competitive pressure from the private sector. Stablecoins — particularly dollar-pegged tokens like USDC and USDT — are gaining traction faster than CBDCs globally. As one Citi executive recently noted, stablecoins have effectively overtaken the CBDC narrative in markets where regulatory clarity exists.

Strategic Infrastructure, Not Consumer Convenience

For consumers, the early impact of a digital euro may be modest. Cards, cash and mobile wallets will continue to dominate everyday payments. But for policymakers, the digital euro represents something more fundamental: the assertion that Europe’s financial infrastructure should not be controlled from outside its borders.

It is increasingly clear that payments have become geopolitical infrastructure. The digital euro is Europe’s answer to a world in which financial networks are no longer neutral utilities but instruments of power. Whether it arrives on time, on budget and with sufficient public trust remains an open question. But the direction of travel — toward a European payments system that is less dependent on Washington, less vulnerable to disruption and more aligned with the continent’s strategic interests — is now politically irreversible.

The 2029 target is ambitious. The politics are messy. But the vote on 10 February made one thing clear: Europe has decided it can no longer afford to rent its financial plumbing from someone else.

The post Europe’s Digital Euro Plan Has One Real Target: Visa and Mastercard appeared first on European Business & Finance Magazine.

Quick Answer: Global private equity firms are piling into India’s cricket market after CVC Capital sold its majority stake in the Gujarat Titans for a return exceeding 350% in four years. KKR, Blackstone, Carlyle and Partners Group are now circling stakes in Royal Challengers Bengaluru and Rajasthan Royals, with franchise valuations approaching $2 billion. The Indian Premier League’s centralised revenue-sharing model, $6.2 billion broadcast deal and 1.19 billion viewers make it an increasingly attractive alternative asset class.

For decades, the ownership structure of India’s biggest cricket league looked more like a Bollywood cast list than an institutional investor pitch deck. Franchise backers included film stars Shah Rukh Khan and Preity Zinta, industrial dynasties and the Indian arm of drinks giant Diageo. That is changing fast.

A wave of global private equity capital is now flowing into the Indian Premier League, drawn by a combination of surging broadcast economics, predictable revenue structures and a scarcity of franchises that has turned team ownership into a trophy asset with serious returns.

The catalyst was a single deal. European buyout firm CVC Capital Partners sold its majority stake in the Gujarat Titans to India’s Torrent Group, generating a return of more than 350 per cent in dollar terms — just four years after acquiring the franchise. The deal valued the team at approximately $900 million.

That exit lit up the market. According to banking sources reported by Reuters, KKR and Blackstone are now both pursuing stakes in Royal Challengers Bengaluru, the reigning IPL champions. KKR is also exploring a potential investment in Rajasthan Royals, while Swiss-based Partners Group is evaluating at least one franchise. Carlyle, too, has been linked to expressions of interest. Avram Glazer — whose family co-owns Manchester United and the Tampa Bay Buccaneers — has reportedly submitted a bid of around $1.8 billion for RCB.

These are not speculative plays. The economics behind IPL franchises have matured significantly since the league’s founding in 2008, when eight teams were auctioned for a combined $724 million. Today, individual franchises are commanding valuations between $900 million and $2 billion, a trajectory that mirrors — and in some cases outpaces — early-stage franchise economics in major American sports leagues.

Why the Numbers Work

The IPL’s financial architecture is unusually investor-friendly. The Board of Control for Cricket in India pools all media rights and league-level sponsorship revenue, retains half, and distributes the rest equally among the ten franchises. This centralised model guarantees each team approximately $55 million per year from the board’s pool alone, before ticket sales, team-level sponsorships or merchandise are factored in. This structure, more centralised than even the models used in Europe’s private credit markets, provides the kind of predictable economics that institutional investors value.

The broadcast rights underpin everything. In 2022, the BCCI sold IPL media rights for the 2023–2027 cycle to Viacom18 and Star Sports — now part of the merged Reliance-Disney India entity — for $6.2 billion, more than doubling the previous deal. On a per-match basis, that makes the IPL the second-most valuable sports league in the world after the NFL.

Viewership supports the premium. The 2025 season attracted a record 1.19 billion viewers across digital and television — a figure that dwarfs the NFL’s audience and positions IPL as perhaps the single most-watched annual sports competition globally.

Mohit Burman, co-owner of Punjab Kings and an Indian industrialist, told Reuters that franchise sponsorship revenue has been growing at roughly 30 per cent annually. He described the IPL as an asset class that has “clearly come of age” and one capable of rivalling or outperforming US league returns, even if the absolute scale remains smaller.

The Risks

There are headwinds. The Reliance-Disney merger, which consolidated IPL’s streaming and television rights under a single entity, has raised concern that reduced competition could suppress the value of the next broadcast auction in 2027 — the single most important revenue driver for franchise owners. Competing T20 leagues in South Africa, the UAE and Australia are also fragmenting player availability and could dilute the IPL’s talent monopoly over time.

Regulatory risk is another consideration for foreign investors. BCCI rules restrict dual franchise ownership and impose governance requirements that could complicate multi-team portfolio strategies of the kind common in global private equity co-investment structures.

The Bigger Picture

The rush into IPL franchises is part of a broader institutional pivot away from traditional Western asset classes. As global investors rotate out of US-dominated portfolios and into emerging markets and alternative assets, India’s combination of structural economic growth, a young consumer base and an increasingly professionalised sports economy presents a compelling long-term thesis.

Private equity’s entry also signals a maturation of the IPL itself. What began as a celebrity-driven entertainment venture is evolving into an institutional-grade asset class, with governance, revenue transparency and exit liquidity that increasingly resembles the kind of disciplined capital deployment reshaping European equities.

The next IPL season begins on 26 March. By the time it does, several of the world’s largest private equity firms may already be franchise owners — and the league’s transformation from a cricket tournament into a global financial asset will be all but complete.

The post From Bollywood to Wall Street: How the IPL Became a $2bn Investment Play appeared first on European Business & Finance Magazine.

The US Dollar Index is hovering near a four-year low. Bank of America’s February survey shows fund manager positioning at its most negative since at least 2012. Capital is flowing out — and the reasons are structural, not cyclical.

Fund managers have taken the most bearish stance on the US dollar in more than a decade, as the currency absorbs the accumulated damage of unpredictable American policymaking, eroding institutional confidence, and a widening gap between what global investors expect from the world’s reserve currency and what they are actually getting.

The dollar is down 1.3 per cent in 2026 against a basket of peers including the euro and the pound, extending a punishing 9.4 per cent decline across the whole of 2025. The Dollar Index is now hovering close to a four-year low, having briefly dipped below 96 in late January — territory it has not visited since early 2022.

Bank of America’s February fund manager survey, published on Friday, quantified the scale of the retreat. Dollar positioning among the institutional investors polled has dropped below last April’s nadir — the point at which President Donald Trump spooked global markets with sweeping tariff announcements that triggered the sharpest half-year dollar decline since 1973. The survey found that managers’ exposure to the dollar is now the most negative since at least 2012, the earliest year for which the bank holds data.

The Shift Is Not Speculative — It Is Structural

What makes this move particularly significant is its composition. This is not a hedge fund bet. The selling is being driven by so-called real money investors — pension funds, sovereign wealth funds, and long-term institutional allocators — who are either hedging against further dollar weakness or actively reducing their exposure to dollar-denominated assets.

Options data from CME Group confirms the shift. Bets against the currency have outstripped positive wagers on the dollar so far this year, reversing the positioning of the fourth quarter of 2025, when optimism about US economic exceptionalism still prevailed. Bets on further dollar depreciation versus the euro, measured through risk reversals, have reached levels only previously seen during the Covid-19 pandemic and after the April 2025 tariff shock.

Caroline Houdril, a multi-asset fund manager at Schroders, told the Financial Times that the firm is witnessing increasing capital repatriation, with overseas investors who previously held dollars converting their funds back into local currencies. That process — European and Asian institutions bringing capital home — is the kind of structural flow that tends to be sticky rather than speculative.

Why the Dollar Is Losing Its Gravitational Pull

The traditional case for holding dollars rests on three pillars: higher US interest rates relative to peers, the depth and liquidity of US capital markets, and the dollar’s role as the world’s reserve currency. All three are under pressure simultaneously.

The US–Europe interest rate spread has narrowed to approximately 0.25 percentage points as the Federal Reserve has cut rates by 75 basis points since mid-2025 while the European Central Bank has held a tighter stance for longer. That compression has removed one of the dollar’s key advantages and redirected capital flows toward the eurozone. In January alone, net outflows from US Treasuries reached an estimated $18 billion, with a further $22 billion leaving US equities.

Trump’s aggressive geopolitical actions — from sweeping tariffs that disrupted global supply chains to threats against European countries over Greenland — have raised anxiety over America’s attractiveness as a safe destination for the world’s capital. His pressure on the Federal Reserve has compounded the concern. Atlanta Fed President Raphael Bostic acknowledged earlier this month that confidence in the dollar is being questioned and warned that such doubts could create ripples in the currency’s valuation.

The appointment of Kevin Warsh as the new Fed Chair has eased some concerns about institutional independence, but as Bank of America’s Ralf Preusser noted, the easing of those fears has not translated into renewed demand for the dollar or greater optimism toward US assets. The damage appears to have been done.

Where the Money Is Going Instead

The beneficiaries are visible across currency and commodity markets. The euro and the pound have strengthened against the dollar, while the Swiss franc has surged to an 11-year high, gaining 3.5 per cent against the dollar in the first six weeks of 2026 alone. Gold has been a primary recipient of defensive flows, trading near record highs as investors seek insulation from currency debasement and geopolitical risk. European equities have outperformed US equities year-to-date in dollar terms, partly because the falling greenback flatters returns when converted back into local currencies — a dynamic that has accelerated the broader rotation of global capital away from Wall Street.

Expectations are building among reserve managers that diversification away from the dollar will accelerate. Nearly half of Bank of America’s respondents identified strong US economic data — particularly the January jobs report, which significantly exceeded expectations — as the primary near-term catalyst for a potential dollar rebound. But even that caveat underscores how fragile sentiment has become: the bull case for the dollar now rests not on structural advantages but on the hope that a single data print might temporarily reverse a deeply entrenched trend.

The dollar’s decline is no longer a trade. It is a reallocation — and for now, the direction of travel is clear.

The post Fund Managers Turn Most Bearish on the Dollar in Over a Decade as Policy Chaos Erodes Confidence appeared first on European Business & Finance Magazine.

The global economy is being reshaped by artificial intelligence, rearmament, weight-loss drugs, and the institutionalisation of crypto. Here are ten investments — across seven industries — that we believe offer the strongest risk-adjusted returns for the year ahead.

The investment landscape in 2026 is defined by a handful of structural forces that are unlikely to reverse any time soon. Artificial intelligence is moving from hype to infrastructure. European defence spending is entering a generational upcycle. The GLP-1 weight-loss revolution is expanding from injectable drugs to pills. And Bitcoin, after a brutal late-2025 correction, is being treated less like a speculative punt and more like a genuine portfolio asset by institutional allocators.

At the same time, there are serious risks. Over $700 billion in combined capex spending has been guided by just five hyperscalers for 2026, and investors are increasingly asking whether the AI buildout will generate returns commensurate with the investment. Trade policy remains unpredictable. Interest rate paths are diverging across major economies. And equity valuations in the United States remain historically stretched, with the S&P 500 trading at a price-to-earnings ratio of roughly 28.

Against that backdrop, we have selected ten investments — spanning semiconductors, defence, big tech, healthcare, aerospace, and crypto — that we believe combine strong fundamentals, structural tailwinds, and defensible competitive positions. Not all are cheap. But all, in our view, are positioned on the right side of the forces reshaping the global economy.

1. Nvidia (NVDA)

Sector: Semiconductors / Artificial Intelligence Why now: Dominant market share in the infrastructure layer of AI

Every serious list of stocks for 2026 begins here, and for good reason. Nvidia controls approximately 92 percent of the GPU market for AI workloads. Its most recent quarterly revenue came in at $57 billion, with nearly 90 percent of that generated by its data centre business. The company has gone from being a graphics chip maker to the essential supplier of the hardware underpinning the most significant technology shift since the internet.

The bull case is straightforward. Cloud service providers — Microsoft, Google, Amazon, Meta, and Oracle — have collectively guided to over $700 billion in capital expenditure for 2026, a $290 billion increase from 2025. The vast majority of that spending flows through Nvidia’s ecosystem. Its Blackwell architecture is shipping at scale, and customer demand continues to outstrip supply.

The bear case is equally real. At some point, investors will question whether these hyperscalers can generate adequate returns on their AI investments. Nvidia’s stock has risen more than 1,100 percent over five years, and any deceleration in orders would hit the share price hard. Competition from AMD and custom silicon (Google’s TPUs, Amazon’s Trainium) is real, if not yet material.

But for 2026, the infrastructure buildout is not slowing down. Nvidia predicted last year that AI infrastructure spending would reach into the trillions by the end of the decade. For investors with a tolerance for volatility, the company remains the single best proxy for the AI investment cycle.

2. Taiwan Semiconductor Manufacturing (TSM)

Sector: Semiconductors / Manufacturing Why now: Irreplaceable position in advanced chip fabrication

If Nvidia designs the chips that power AI, TSMC makes them. The Taiwanese foundry manufactures approximately 70 percent of the world’s processors and an estimated 90 percent of all advanced chips — those made using 7-nanometer process nodes and below. That concentration of capability is both its greatest strength and its most significant geopolitical risk.

Advanced chips accounted for nearly 74 percent of TSMC’s wafer revenues in 2025. The company commenced mass production of 2-nanometer chips at both its Hsinchu and Kaohsiung sites in Taiwan in the fourth quarter of 2025, and is now preparing to scale its cutting-edge A16 process node for high-performance computing workloads.

TSMC is also aggressively ramping its chip-on-wafer-on-substrate packaging capacity — the critical technology that pairs logic chips with high-bandwidth memory in AI accelerators. Industry estimates suggest the company may boost monthly CoWoS capacity from 75,000–80,000 wafers in late 2025 to as high as 120,000–130,000 by the end of 2026.

Morningstar recently assessed that TSMC is positioned to stay ahead of its competitors for decades. Its share price has risen 262 percent over the past three years, but the forward earnings multiple remains reasonable relative to its growth trajectory and the effective monopoly it holds in advanced fabrication. For anyone investing in the AI theme, TSMC is the foundational layer.

3. Rheinmetall (RHM)

Sector: European Defence Why now: Structural rearmament cycle with multi-decade visibility

European defence is no longer a cyclical trade — it is a structural transformation. NATO members are not debating whether to hit the 2 percent of GDP spending guideline; they have already surpassed it. Several frontline and northern European countries are planning sustained spending above 3 percent, and Poland’s defence expenditure exceeded 4.5 percent of GDP in 2025.

Rheinmetall, the German arms manufacturer, sits at the centre of this shift. The company is the primary beneficiary of Germany’s decision to raise its defence budget from €86 billion in 2025 to €108.2 billion in 2026, with a target of €225 billion by 2029. Berlin activated a €100 billion special defence fund and, in 2025, approved a €500 billion multi-year package covering defence, infrastructure, and industrial capacity.

Goldman Sachs has a €2,200 price target on Rheinmetall and maintains a buy rating. Barclays and Deutsche Bank see the stock reaching €2,050, while Berenberg projects €2,330. The company benefits from sustained demand for ammunition, armoured vehicles, and artillery systems as European countries replenish stockpiles depleted by the Ukraine conflict.

Critically, analysts argue that even a peace deal in Ukraine would not materially reduce European defence spending. As Goldman strategist Sam Burgess put it, Russia would use any pause to reconstitute its forces, and NATO must prepare accordingly. This is not a war trade. It is an industrialisation trade — and Rheinmetall has the operating leverage to capture it.

4. Meta Platforms (META)

Sector: Digital Advertising / Artificial Intelligence Why now: Undervalued relative to earnings power despite massive AI spending

Meta reported $201 billion in revenue for 2025, with operating margins of 41 percent from its Family of Apps segment — Facebook, Instagram, WhatsApp, and Messenger. The company’s 3.58 billion daily active users generate an advertising machine that produces over $100 billion in annual operating profit. Free cash flow hit $43.6 billion last year.

Morningstar maintains an $850 fair value estimate for Meta’s wide-moat business, noting that shares remain undervalued despite recent gains. The firm expects 2026 sales growth of 25 percent, driven by AI-powered improvements in ad targeting, engagement, and content recommendation. Ad impressions were up 18 percent in the most recent quarter, with video engagement particularly strong.

The concern, obviously, is spending. Meta has guided to $125 billion in capital expenditure and $162 billion in operating expenses for 2026, the vast majority directed at AI infrastructure. Reality Labs — the metaverse division — has now accumulated roughly $80 billion in cumulative losses since late 2020, with $19.2 billion lost in 2025 alone.

The investment thesis requires accepting that Meta’s core advertising business is so profitable that it can absorb these losses while still delivering superior returns. The evidence so far supports that view. Threads has already reached 320 million monthly users. Instagram Reels continues to gain share against TikTok. And every improvement in Meta’s AI capabilities feeds directly back into the ad engine that funds everything else.

5. Novo Nordisk (NVO)

Sector: Healthcare / GLP-1 Pharmaceuticals Why now: Deeply discounted after a 66 percent drawdown, with a first-mover advantage in oral weight-loss drugs

Novo Nordisk has been punished by the market. Its share price has fallen 66 percent from its mid-2024 peak, driven by concerns about competition from Eli Lilly, pricing pressure from a US government agreement, and guidance that 2026 financials will be weak. The stock now trades at a price-to-earnings ratio of just 13, compared to Eli Lilly’s 50.

That valuation gap looks excessive. In early 2026, Novo Nordisk received FDA approval for the first oral GLP-1 weight-loss drug — a significant milestone that could dramatically expand the addressable market by reaching patients who refuse injectable treatments. Clinical data suggests Novo’s oral drug may be slightly more effective than Eli Lilly’s competing pill, with a potentially better safety profile.

Morningstar rates Novo Nordisk at 4 stars, trading at a 21 percent discount to fair value. The dividend yield of 3.9 percent is well covered by a 40 percent payout ratio. The company expects improved performance in 2027 as the oral drug gains traction.

For investors willing to take a contrarian position in healthcare, Novo Nordisk at 13 times earnings — in a market where the GLP-1 opportunity is still in its early stages — represents one of the most compelling value opportunities of 2026. The weight-loss drug market is projected to reach $150 billion annually by 2030. Novo Nordisk will remain one of two companies that dominate it.

6. Amazon (AMZN)

Sector: Cloud Computing / AI / E-commerce Why now: Trading at a meaningful discount to fair value, with AWS positioned as the leading AI cloud platform

Amazon reported strong fourth-quarter results across all segments, yet the stock fell 12 percent after the company guided to $200 billion in capital expenditure for 2026. Investors reacted to the headline number, not the underlying business — which continues to compound at an extraordinary rate.

Morningstar has a $260 fair value estimate on Amazon, putting the stock at a 19 percent discount — a 4-star rating. AWS remains the world’s largest cloud infrastructure provider, and its AI capabilities are attracting enterprise customers at an accelerating rate. Amazon’s custom Trainium chips are gaining adoption, reducing the company’s dependence on Nvidia while improving margins in its cloud business.

The advertising division — now a $60 billion-plus annual run rate — is one of the fastest-growing segments of the business. Retail margins continue to improve as the company optimises its logistics network and expands same-day delivery. Prime membership remains one of the stickiest subscription products in the world.

The capex number is large, but so is the opportunity. Amazon is building the infrastructure layer for enterprise AI adoption — and unlike pure-play AI companies, it has three separate profit engines (cloud, advertising, and retail) to fund the investment.

7. Bitcoin (BTC)

Sector: Digital Assets / Cryptocurrency Why now: Institutional adoption is structural, supply is constrained, and the asset is trading well below most analyst targets

Bitcoin enters 2026 in an unusual position. It was the worst-performing major asset in late 2025, losing more than 30 percent in six weeks as over $1.2 trillion in crypto market value evaporated. The correction was driven not by retail panic but by mechanical deleveraging — $19 billion in liquidations in a single day — and institutional de-risking as macro conditions tightened.

Yet the structural case for Bitcoin has never been stronger. Over $50 billion flowed into spot Bitcoin ETFs in the past year, and most of that capital has not left. The 20 millionth Bitcoin will be mined in March 2026, further constraining supply. Institutional demand — from ETF allocators, corporate treasuries, and sovereign wealth funds — now exceeds new annual Bitcoin supply.

Price forecasts for 2026 range widely. Standard Chartered targets $150,000. Bitwise and Bernstein project $200,000. JPMorgan and Citibank sit at $170,000 and $133,000 respectively. CoinShares expects a range of $120,000 to $170,000, with stronger price action in the second half of the year as rate cuts and improved liquidity conditions take hold.

Bitcoin is not a stock, and it should not be treated as one. It is a volatile, uncorrelated asset that has been the top-performing investment in ten of the past thirteen years. A modest allocation — Bitwise’s CIO suggests treating it like a portfolio seasoning rather than a main course — can improve risk-adjusted returns over time. At current prices, the risk-reward skews favourably for investors with a multi-year horizon.

8. Broadcom (AVGO)

Sector: AI Infrastructure / Semiconductors Why now: Converting AI momentum into real earnings, with a differentiated position in custom silicon and networking

Broadcom occupies a different niche in the AI ecosystem to Nvidia. While Nvidia dominates general-purpose GPUs, Broadcom focuses on custom AI accelerators (designed for specific hyperscaler workloads) and the networking infrastructure that connects AI clusters at scale. Both are critical — and both are seeing explosive demand.

Revenue grew to over $18 billion in the most recent quarter, a 28 percent increase year-on-year. For fiscal 2025, adjusted EBITDA and free cash flow grew 35 percent and 39 percent respectively. The company’s forward price-to-earnings ratio of around 33 and price-to-sales ratio of 25 are elevated but justifiable given the growth trajectory.

The stock is well off its 52-week high and down nearly 4 percent year-to-date, presenting an entry point for buy-and-hold investors. Broadcom’s custom silicon business — designing bespoke AI chips for Google, Meta, and other hyperscalers — is a high-margin, sticky revenue stream that competitors cannot easily replicate. Its VMware acquisition is also beginning to contribute meaningful recurring revenue.

For investors who want AI exposure beyond Nvidia, Broadcom offers a differentiated, infrastructure-focused play with strong profitability and growing cash generation.

9. Rolls-Royce Holdings (RR.L)

Sector: Aerospace / Defence / Energy Why now: Turnaround complete, with defence upside and commercial aviation recovery compounding

Rolls-Royce has been one of the most remarkable corporate turnarounds in recent European history. Under CEO Tuck Holroyd, who took over from Tufan Erginbilgic in late 2025 after Erginbilgic delivered the initial restructuring, the company has transformed from a business burning cash to one generating substantial free cash flow.

The investment thesis rests on three pillars. First, the commercial aviation recovery is structural — Rolls-Royce earns the majority of its revenue from long-term service agreements tied to engine flying hours, and international wide-body traffic has returned to pre-pandemic levels. Second, the defence division benefits directly from European rearmament spending, with military engine programmes and submarine propulsion systems seeing increased demand. Third, the company’s small modular reactor programme positions it as a potential beneficiary of the nuclear energy renaissance driven by AI data centre power demands.

Rolls-Royce stock has surged approximately 400 percent from its 2022 lows, but analysts argue the earnings trajectory still supports further upside. The company’s exposure to both the commercial aviation cycle and the defence spending cycle gives it a diversification advantage that pure-play defence stocks lack.

10. Alphabet (GOOGL)

Sector: Search / Cloud / Artificial Intelligence Why now: Trading at a discount to fair value despite leading positions in search, cloud, and AI research

Alphabet is the forgotten member of the Magnificent Seven. While Meta and Nvidia have attracted most of the AI enthusiasm, Alphabet has been quietly building one of the deepest AI capabilities in the industry — from its Gemini large language models to its TPU custom chips to DeepMind’s research breakthroughs.

Google Cloud revenue grew 35 percent in the most recent quarter and is now profitable on an operating basis. Search revenue remains resilient despite fears that AI chatbots would erode Google’s dominance — in fact, AI-powered search features have increased engagement and ad click-through rates. YouTube advertising continues to grow as connected TV viewing expands globally.

Morningstar rates Alphabet as undervalued. The stock finished a recent week down after mixed earnings reactions, but the underlying business continues to compound. The company guided to $180 billion in capital expenditure — a staggering figure, but one that reflects the scale of its ambition in AI infrastructure, cloud computing, and autonomous driving (Waymo).

For investors who believe AI will enhance rather than destroy Google’s search monopoly, Alphabet at current valuations represents an asymmetric opportunity. The company generates enough cash to fund its AI ambitions while maintaining a fortress balance sheet with over $100 billion in cash and equivalents.

The Portfolio Logic

These ten investments are not a balanced portfolio. They are deliberately concentrated in the themes we believe will define returns over the next twelve to thirty-six months: the AI infrastructure buildout, European rearmament, the GLP-1 healthcare revolution, and the institutionalisation of digital assets.

A more conservative allocation might weight towards the value plays — Novo Nordisk at 13 times earnings, Amazon at a 19 percent discount to fair value, Alphabet trading below Morningstar’s estimate — while treating the higher-multiple names (Nvidia, Broadcom) and Bitcoin as growth and diversification positions.

The common thread is structural demand. Every company on this list is positioned on the supply side of a multi-year spending cycle that is being driven by forces — geopolitical instability, AI adoption, demographic health trends, monetary debasement — that are unlikely to reverse in the near term.

That does not make any of them risk-free. Valuations can compress. Trade wars can escalate. AI capex can disappoint. But in a world defined by uncertainty, we believe these ten investments offer the strongest combination of competitive positioning, earnings visibility, and exposure to the forces reshaping the global economy.

This article was produced by European Business Magazine. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual readers. The value of investments and the income from them can go down as well as up, and investors may not get back the amount originally invested.

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