‘Reacceleration ahead’: Bank of America names global tech stocks to buy — predicting growth in the second half

Bank of America analysts painted an optimistic picture for a handful of European technology stocks, forecasting an acceleration in growth during the latter half of this year. Despite a challenging earnings season and mixed results in the second quarter — which contributed to the 10% fall in European technology stocks since mid-July — the bank sees potential for acceleration in critical areas of the industry. .STOXX 1Y line The European tech sector has experienced significant volatility this year, with performance varying widely across different companies. While some firms like SAP have seen substantial gains of nearly 45%, others, such as Capgemini , have struggled. However, Bank of America remains bullish, particularly in software, information technology services, and payments. “We expect [sales] growth to accelerate through the remaining of the year with 5.5% growth in [second half] from 5.0% in [first half], driven by a progressive recovery in IT Services, having reached a trough of -2.7% organic growth in [first quarter] and finishing the year with +0.7% growth in [fourth quarter] as discretionary spend recovers,” said Bank of America analysts led by Frederic Boulan in a research note to clients titled “Year-end outlook: reacceleration ahead” on Aug. 27. The bank’s analysts said companies disclosed numerous challenges facing the sector in their second-quarter earnings, including softening demand and longer sales cycles in some areas, ongoing efforts to monetize artificial intelligence technologies, and a widespread focus on cost efficiencies and margin expansion. Despite these challenges, Bank of America sees reason for optimism and named several stocks it believes are well-positioned to benefit from this anticipated reacceleration. All of these stocks are also traded in the U.S. In the software sector, Bank of America reiterated its buy ratings on SAP, Sage , and Dassault Systemes . For IT services, it favors Sopra Steria , NetCompany, and Alten . In the payments space, Adyen , Nexi , Wise , and Worldline are among its top picks. According to the investment bank, artificial intelligence is emerging as a significant factor in the tech sector’s growth prospects. While many companies are still in the early stages of monetizing AI technologies, Bank of America analysts see it as a potential catalyst for future investments. SAP, for example, plans to double its AI use cases from over 100 today to around 200 by the end of 2024, according to the Wall Street bank. The bank’s analysts see strong potential in the cloud computing sector, particularly as a beneficiary of AI-driven demand. The BofA estimates that revenues for the cloud industry will grow by 26% in 2024, accelerating from 22% in 2023.