Article last updated 24 July 2025.
The American technology giants dubbed the Magnificent Seven captured headlines in 2023 as they drove more than half of last year’s 24% gain in the US S&P 500 index. For some this outperformance has continued: as of late May, Nvidia, Meta and a few others had significantly outpaced the rest of the market since the beginning of the year. However, the focus on this narrow group has detracted attention from a much wider range of companies that have been performing well so far in 2024.
Performance of the European stock market was also highly concentrated last year. A narrow band of 11 companies, dubbed the ‘Granolas’ by investment bank Goldman Sachs, contributed around half of the 13% rise in the Stoxx Europe 600 index in 2023. The Granolas are GSK, Roche, ASML, Nestle, Novartis, Novo Nordisk, L’Oreal, LVMH, AstraZeneca, SAP and Sanofi — a far more eclectic collection than the Magnificent Seven, spanning sectors as diverse as pharmaceuticals, food, beauty and luxury goods as well as technology. Four of these companies had outperformed the Euro Stoxx 600 index by more than ten percentage points in the year to date – including a 23 percentage point outperformance for Novo Nordisk.
Clearly, the Granolas have even fewer common drivers than the Magnificent Seven, and their correlated rise may be unlikely to persist. However, they are all global leaders in their own right and have exposure to some compelling growth themes, which provide diversification beyond the technology sector.
Healthy improvements
For example, Europe has a strong pharmaceutical industry which is benefiting from improvement in the pipeline of new drugs coming from its heavy spending on research and development. This improvement has been driven by insights from more sophisticated and cost-effective genomics, greater computational power and more sophisticated artificial intelligence (AI) algorithms for analysing clinical data. As a result, and alongside a greater commercial focus, they’ve made significant advances in treating a host of diseases, including cancers.
Another exciting avenue of growth has emerged in treating obesity through the development of next-generation GLP-1 weight-loss medicines by diabetes-focused companies Novo Nordisk of Denmark and US rival Eli Lilly. These medicines replicate the hormone GLP-1, which occurs naturally in the body, promoting a feeling of fullness and reducing appetite, with impressive reductions in weight. While there are side-effects, the significance of the weight loss and reduction in weight-related cardiac and other problems have opened up a sizeable commercial opportunity. Not to mention potential applications in areas such as treatments for Alzheimers and for addiction.
It’s all about the data
Beyond the Granolas, companies offering data and analytics have performed strongly — albeit somewhat under the radar. They typically have rich (and impossible to replicate) proprietary data sets that have been built up over many decades — for example Experian via its credit bureaux, RELX through its risk, legal and scientific information businesses, Wolters Kluwer through its health, tax and regulatory units and Verisk through its insurance risk data. They have increasingly been applying software knowhow and AI in order to use this data to create software-based solutions which significantly improve and automate customer workflow and decision-making.
This has raised their growth rates, made them even more mission-critical to their customers and improved their resilience to broader economic downturns. For these reasons, investors have accorded them higher valuations. All of the above have made some strong gains in short order, and they may be vulnerable to any wider market setback in the short term, while the potential for profit growth needs to be weighed up against the premium you have to pay for it.
Looking for value
Are there areas of the market offering interesting growth that have been left behind? Clean energy is one area that has lagged over the last couple of years but continues to offer potential. And Europe has some world leading businesses across renewable electricity generation and lower carbon utilities — such as Vestas, the Danish wind turbine manufacturer.
Many of these companies are relatively immature and with lumpy order intake, and their valuations became excessive during the ultra-low interest rate period of 2020 and 2021 when cheap money chased long term growth themes. They then suffered along with the Magnificent Seven and growth stocks in general amid aggressive interest-rate rises from 2022.
Valuations for clean energy stocks haven’t stabilised as they have done for less capital-intensive growth areas. But the higher input and financing costs for clean energy stocks appear to be abating, supported by government funding through legislation such as the US’ Inflation Reduction Act and Infrastructure, Investment and Jobs Act. And the transition to clean energy is a global structural shift that could support growth in these companies for many years to come.
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