Jefferies looks at the ‘Nvidia of Europe’ in critical chip market
The little-known German company SÜSS Microtec holds more than half of the market for a critical technology used in Nvidia chip production, Jefferies stated on Monday, September 23. Last week, the investment bank referred to the company as the “Nvidia of Europe” and suggested that its shares could rise another 34%. SÜSS produces equipment for chip manufacturing, which is used by industry leader TSMC (Taiwan Semiconductor Manufacturing Co). SÜSS shares rose 2% on Monday and have increased 104% this year—close to Nvidia’s performance.
Details
SÜSS Microtec has a 55% market share in CoWoS (chip-on-wafer-on-substrate), an advanced technology used in chip production, according to Jefferies equity sales specialist William Beavington in a note cited by Barron’s. TSMC uses this technology to package the key Nvidia AI graphics processing units, including its Hopper and Blackwell chips. That makes SÜSS “a unique play in Europe on the Nvidia/AI supply chain, given its multilayered exposure,” Beavington noted.
SÜSS Microtec, a Bavarian company with a market capitalization of approximately EUR1.1 billion, generates about 30% of its revenue from CoWoS technology. On September 17, another Jefferies analyst, Olivia Honychurch, gave SÜSS shares their first rating—initiating coverage with a buy. Honychurch set a target price of EUR76 per share, which was 41% higher than the closing price on September 16. The analyst dubbed the company the “Nvidia of Europe.”
Jefferies estimates that the company’s shares are currently trading at an 18% discount compared to its industry peers. This valuation gap is expected to close as investors become more aware of the company’s growth potential. According to Jefferies, significant drivers for SÜSS’s future development in the coming years will include “rising shipments at TSMC” and the spread of complex high bandwidth memory chips.
Stock performance
On September 23, SÜSS shares rose 2.11% on the German Xetra exchange to EUR58.10 per share. On September 17, after Jefferies recommended buying the stock, the price hit EUR60.60—a high since August 1 and a nearly 13% gain from the previous day’s close. In the following days, the stock price corrected slightly.
Compared to the beginning of 2024, SÜSS shares are now up 110%—more than doubling. For comparison, Nvidia’s stock has risen 136% during the same period. Nvidia had been the best-performing stock in the main U.S. S&P 500 index for much of the year until it was surpassed last week by the energy company Vistra Corp.
All eight analysts tracking SÜSS shares have a buy recommendation, according to data from FactSet cited by Barron’s. Deutsche Bank and U.S. broker Stifel Nicolaus are among the strategists who are bullish on the stock, Barron’s added.
