Bank of America names the best buy stocks in the European IT sector; key indicators show recovery is imminent in 2026

Investing.com – Bank of America Securities (BofA Securities) has turned bullish on the European IT services sector, with its proprietary sector indicator improving for the seventh consecutive month. The broker predicts that the industry will recover to 2.7% organic revenue growth by 2026.

After a prolonged downturn that pushed the sector’s valuation to its lowest point in nearly a decade, BofA states that the recovery has begun and has identified four stocks it considers best positioned to seize this opportunity.

Capgemini

BofA’s top large-cap pick is Capgemini, which is their preferred target for their extensive European IT recovery strategy. This French consulting and technology giant recently reported Q4 earnings that beat expectations by 2.5%. BofA believes that as corporate IT budgets stabilize, its scale and diversification will become key competitive advantages.

The stock’s current P/E ratio is near its decade low, and BofA finds its valuation attractive and supported by solid fundamentals.

Netcompany

Netcompany is one of BofA’s most favored picks in its specific sector focus, and recent performance has justified this enthusiasm. The Danish IT services firm exceeded expectations in both revenue and EBITDA in Q4, while providing what BofA calls a “robust outlook for 2026.”

BofA believes that Netcompany’s deep focus on digital transformation in the public sector has maintained resilience even during the 2008 financial crisis, which is a lasting source of its stable profitability. Its current valuation offers significant upside relative to its growth prospects.

Sopra Steria

Sopra Steria has become a favored sector supplier on BofA’s buy list due to its strong industry-specific capabilities.

This Franco-Brench group streamlined its business after divesting its banking software division in 2024, leaving a more pure-play IT services business that is better positioned to benefit from the sector rebound.

BofA considers Sopra Steria’s valuation attractive relative to peers and believes it is well-suited to win business as clients shift toward deeper system integration and outcome-based technology contracts.

Kainos

As the smallest of BofA’s four buy-rated stocks, Belfast-based Kainos is identified as one of the main drivers of the broker’s 2026 sector growth forecast.

Kainos has established a strong delivery reputation in Workday implementation and UK government digital services, both of which generate recurring revenue and enable it to access structural rather than purely cyclical IT spending.

BofA’s buy thesis is based on its niche market positioning and the visibility provided mainly by its public sector client base.

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