Trump says Iran war "close to over" amid hopes for more negotiations
Investing.com -- European software stocks present compelling buying opportunities following a sharp selloff, according to Bank of America analysts.
The sector has declined 35% since mid-2025 on concerns about generative AI disruption and emerging macro risks from Middle East conflicts. However, analysts see strong positioning against AI risks at several companies, while fundamentals remain largely resilient.
The fourth quarter earnings season delivered mixed results, with 36% of companies beating revenue expectations and 36% missing. Software growth slowed to 7.5% in the fourth quarter from 9.6% in the third quarter, while information technology services remained stable.
Bank of America identifies core banking, enterprise resource planning, and product lifecycle management segments as less exposed to AI disruption, while single-point solutions face higher risk.
Sap is among Bank of America’s top large-cap software picks for 2026 and one of its 25 stocks for 2026.
Despite cloud computing bookings marginally missing expectations in the fourth quarter, analysts view ongoing AI and business data cloud traction as encouraging.
The stock trades at 23 times price-to-earnings for approximately 18% earnings per share compound annual growth rate to 2028, representing a significant discount to global peers.
The company announced a €10 billion share buyback program during fourth quarter results, representing 5% of market cap.
SAP announced plans to distribute approximately €2.92 billion in dividends for its 2025 earnings. The proposed dividend of €2.50 per share represents a 6.4% increase from the previous year.
Temenos shares declined nearly 9% year-to-date despite solid fourth quarter results and bullish 2026 and 2028 guidance. The 2026 guidance came 5% to 6% ahead of consensus on earnings before interest and taxes and free cash flow.
Analysts see the strongest position in their coverage against generative AI disruption risks. The stock trades at 15.7 times adjusted enterprise value-to-EBITDA, 25% below the 10-year average.
In a recent update, Temenos reported better-than-expected fourth-quarter 2025 results, with revenue and adjusted EBIT exceeding analyst forecasts by 5% and 21%, respectively.
Analysts expect approximately 9% compound annual growth rate to 2028 for Sage, coupled with approximately 70 basis points annual margin expansion.
The 25% price uplift on the AI-enhanced Accounting Premium tier highlights meaningful upside potential. Valuation is in line with European peers at 4.3% free cash flow to equity yield.
The Sage Group reported a 10% increase in total revenue for the first quarter of 2026, driven by a 24% surge in its cloud-native revenue.
Planisware features strong revenue and EBITDA growth profile at 13% and 14% 2028 compound annual growth rate respectively, 30% above the sector, according to BofA. Complex integration and workflows offer protection from AI disruption.
Valuation stands at approximately 10% discount to peers.
Planisware announced a revenue increase of 10.2% in constant currency for the second half of 2025, reaching EUR 198 million.
Analysts believe the market undervalues the TeamViewer’s broadening solutions portfolio, including Digital Employee Experience and Autonomous Endpoint Management. At 29% free cash flow yield, the stock appears to discount a very short cash flow period.
Operates largely within architecture, engineering, and construction markets defined by highly technical workflows and strict regulatory requirements, factors that should limit disruption from AI-only entrants.
Delivered better-than-expected fourth quarter results. The company announced a capital markets day for May 27, the first since 2021. Shares trade at an attractive 40% to 50% discount to global peers.
Proprietary products and platforms spanning tax, customs, and defense position the company well for digital transformation. Analysts forecast 8%, 12%, and 19% organic revenue, adjusted EBITDA, and free cash flow compound annual growth rate for 2026 to 2028.
Management expressed confidence on 2026 organic growth guidance of 1% to 2%, supported by recovery in France and momentum in Italy and Spain. Valuation is compelling at 7.3 times 2026 price-to-earnings, 30% below the five-year median.
Adyen is also one of Bank of America’s 25 stocks for 2026. Despite fourth quarter results and 2026 guidance coming slightly below expectations, analysts see the 22% share price drop as an overreaction. The stock trades at a record low enterprise value-to-EBITDA and price-to-earnings ratio of 15.6 times 2026 EBITDA.
BofA reaffirmed its Buy rating on Wise following strong third quarter results. Bank of America sees the company as a structural leader in cross-border payments with a competitive moat underpinned by its scalable infrastructure and modern technology stack.
Price objective increases by 7% to 1,125p, representing 35% potential upside, reflecting estimate changes and higher terminal EBIT margins.
Wise shares trade on 21.3x and 15.5x 2026 and 2027 EV to underlying adjusted EBITDA including stock-based compensation.
Sabre also saw its Buy rating maintained. Bank of America expects Sabre to materially outpace the GDS industry on air bookings, forecasting 4.3% growth in fiscal year 2026 ahead of the industry at approximately 1.4%, driven by NDC scaling and improving mix in corporate and U.S. markets.
Analysts view the company’s ability to normalize airline data and transact reliably at scale as a key differentiator versus AI-native players. At 8x 2026 EBITDA, risk reward appears on the upside. Price objective lowered to $2.4 from $2.9.
Alongside the aforementioned names, BofA also reiterated Buy ratings on Kainos and HBX Group.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
