"The German Tiger is Waking Up" on the Wave of Defense Boom

Bloomberg Intelligence expects members of Frankfurt's blue-chip DAX index to increase profits by 13% to 15% in the second half of 2025 and into 2026.

The DAX will outpace the 13.5% growth in earnings per share next year that analysts predict for the S&P 500. That's faster growth than any other European country index, while also beating the broader Stoxx 600 benchmark.

“The German tiger is waking up,” Kevin Thozet, a member of Carmignac’s investment committee, told Bloomberg. “I hope that more and more people are realizing that the average profit growth of German companies in 2026 should be higher than in the United States, ” he added.

The optimism is reflected in the performance of equities. They have become the go-to market for investors looking to benefit from Europe’s economic recovery and diversify their portfolios beyond the US .

While corporate America continues to dwarf German stocks as a whole, the U.S. economy has been hobbled this year by Trump’s threat of the highest tariffs in a century. Fears of stagflation are growing, pushing investors to cheaper international markets, Bloomberg reported.

The growth in German earnings will be driven mainly by defense stocks as Europe scrambles to bolster its military , Bloomberg said. Rheinmetall AG, Airbus SE and MTU Aero Engines AG are expected to contribute about 20% to DAX EPS growth in the second half of 2025.

Energy transition, electric vehicles and artificial intelligence stocks are also expected to be key growth drivers , helped by rising investment in data centres, electrification and new AI applications.