Bank of America analysts maintain a bullish outlook for select European technology stocks, predicting a growth surge in the latter half of the year. Despite a turbulent earnings season and a 10% drop in European tech stocks since mid-July, the bank foresees significant potential in key industry areas. This year has been marked by volatility within the sector, with companies like SAP seeing nearly 45% gains, while others such as Capgemini have floundered.
In a research note titled “Year-end outlook: reacceleration ahead,” analysts led by Frederic Boulan projected sales growth to accelerate from 5.0% in the first half to 5.5% in the second half of the year. The recovery is anticipated in IT services, which had seen a dip to -2.7% organic growth in the first quarter but is expected to finish the year at +0.7% as discretionary spending rebounds.
Despite second-quarter challenges, including softening demand, extended sales cycles, and a focus on cost efficiency and margin expansion, the bank remains optimistic. Particularly favored are stocks in software, IT services, and payments that are traded in the U.S. Bank of America reiterated buy ratings on SAP, Sage, and Dassault Systemes in the software sector; Sopra Steria, NetCompany, and Alten in IT services; and Adyen, Nexi, Wise, and Worldline in the payments space.
Artificial intelligence (AI) emerges as a significant catalyst, with substantial growth prospects anticipated. SAP aims to double its AI use cases from over 100 to around 200 by the end of 2024. Additionally, the cloud computing sector is poised for rapid growth, with BofA estimating a revenue increase of 26% in 2024, up from 22% in 2023, driven by AI demand.
In sum, while challenges persist, Bank of America sees promising opportunities in European tech stocks, particularly in software, IT services, and payments, bolstered by the looming impact of AI and cloud computing advancements.
Original Story https://www.cnbc.com/2024/09/02/bank-of-america-names-global-tech-stocks-to-buy-predicting-growth.html
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