1. This software “knife” is still falling.

ServiceNow's first-quarter release was supposed to settle the AI-disruption debate tearing through enterprise software, but investors dumped the entire AI SaaS complex again. The Software ETF sank 5.8%.
Servicenow cratered -18% on Q1 subscription revenue of $3.67B (up 22% YoY) and adjusted EPS of $0.97, both beats.
Holders across the SaaS complex should watch whether this is a one-time blip or a durable margin story. When the cleanest software print of the quarter gets sold 18% on 75 basis points of delayed deals, the market is telling you AI disruption fear has decoupled from fundamentals. Be ready to catch the knife.

2. The European cloud market is dominated by the three US hyperscalers.

The 'big three' command a combined cloud market share of ca 85% (data storage and processing).
Amazon/AWS is by some distance the largest player, commanding a near-45% market share.
Microsoft commands over a quarter of the market, with Google retaining a ca 13% share.
There are a number of sovereign European data centre service providers (OVH, OpCore/Scaleway/Iliad, Telcos etc), but they retain a very low market share.

3. Why are European cloud customers so slow to switch to European cloud vendors?

Despite recent geopolitical changes, and much discussion about the importance of data sovereignty, there is no sign that the three US hyperscalers are experiencing any market share loss in the European cloud industry.
There are many reasons why European Cloud customers have been slow to switch away from the Big Three US hyperscalers.
Source: Morgan Stanley

4. Iran war revives European solar demand.

The conflict is accelerating efforts to find cheaper alternatives and reduce exposure to volatile energy markets.
Solar is among those options, with demand from homeowners more than doubling for some industry players since the war began in late February, according to interviews with more than half a dozen energy equipment wholesalers and renewable utilities in Germany, Britain and the Netherlands.
"This is about European resilience," said Enpal CEO and founder Mario Kohle. "We are seeing this trend in the defence sector too. Just as Europe must be able to defend itself, we must be able to supply our own energy."
That trend is also lifting demand for energy storage technologies, which Holland Solar's Wijnand van Hooff says is seeing demand increases of 40%-50%.
“The shift is structural and highlights how geopolitical shocks can rapidly reprice the value of renewables.”
"The recurring energy crises prove the renewables sector right."

Below: Europe’s energy costs are up since the start of the war, but have come down from peak levels.

5. The German economy has underperformed the EU in the last 5 years.

The lack of investment, both private and public, has long been Germany’s Achilles' heel. Public investments will pick up now that Chancellor Friedrich Merz plans to spend 500 billion euros on infrastructure and other key projects, shedding decades of extreme fiscal caution. But the uptick will be slow.
Local plans also risk getting lost in the maze of regulations and red tape still crippling the economy. According to the German Council of Economic Experts — the five-strong body of economists advising the government — the bureaucratic costs incurred by companies as a result of federal regulations totalled around 65 billion euros in 2024, or 1.5% of the country’s GDP. And a conservative, risk-averse savings culture doesn’t help.

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