Bank of America is optimistic about the recovery of the European IT sector, with AI reshaping the industry landscape.

LootboxPhobia · 2026-03-17T13:56:43+00:00

Bank of America Securities maintains an optimistic outlook on Europe's IT services industry, anticipating a recovery before 2026 following two years of negative growth. The firm highlights Capgemini, Netcompany, Sopra Steria, and Kainos as top picks, believing these companies will benefit from the growth of outsourcing and generative AI, with "buy" ratings and price targets indicating significant upside potential.

LootboxPhobia

2026-03-17 13:56:43

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Investing.com – Bank of America Securities has a constructive outlook on Europe’s IT services sector, expecting the revenue to gradually recover before 2026 after two consecutive years of negative growth. Its proprietary sector indicator has risen for the eighth consecutive month on a six-month moving average basis.

Capgemini is Bank of America’s top large-cap stock, rated “Buy” with a target price of €145. The broker expects that as European clients accelerate offshore outsourcing amid tighter budgets, the group will benefit, and the effective monetization of generative AI products could further drive performance growth. The stock is currently trading at €107.80, implying about a 35% upside to the target price.

Netcompany receives a “Buy” rating with a target price of DKK 336. Bank of America hosted a fireside chat with the company’s CEO in March, believing that its product- and platform-led delivery model and vertical specialization give it an advantage as the industry shifts toward proxy AI and results-based pricing models. The stock is currently trading at DKK 327.

Sopra Steria is rated “Buy” with a target price of €173, while the current share price is €126.90, offering over 36% potential upside. Bank of America emphasizes that its organic growth momentum is improving and expects profit margins to accelerate after the divestment of its banking software division in 2024. IT services have now become the company’s core business.

Kainos is the last of Bank of America’s preferred stocks, rated “Buy” with a target price of 1,290 pence. The broker values its strong exposure to the public sector, which, due to the long-term nature of government contracts, can provide more resilient income during macroeconomic downturns. Bank of America believes that as clients demand higher output with stable budgets, its digital service capabilities will become a lasting competitive advantage.

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