Bubble or no bubble, this is the best stock for AI exposure: analyst
Investing.com -- J.P. Morgan’s 2026 outlook for European Software & IT Services highlights a narrow group of stocks with the largest potential upside, led by Trustpilot, Ionos and SAP, reflecting selective opportunities in a sector still weighed down by uncertainty around AI disruption and valuation deratings.
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The brokerage projects modest multi-year upside for the broader sector but maintains that only companies with clear earnings visibility, complex end-market exposure or structural AI insulation can outperform into 2026.
Trustpilot carries the highest projected upside at over 85%, supported by what J.P. Morgan describes as a “large runway for growth,” with profitability at an inflection point. The brokerage says Trustpilot’s UK business offers “attractive unit economics” that can serve as a template for expansion, and it expects a “beat and raise” earnings trajectory as profitability improves.
Ionos, rated “overweight” with over 41% upside, was the top performer in the software coverage in 2025, rising about 24% YTD. JPM’s upside is based on valuation and EBITDA forecasts, though the report notes Adj. EBITDA expectations remain negative versus consensus in 2025 and 2026 at a decline of 3.5% and 1.9%, respectively.
SAP, one of JPM’s highest-conviction ideas, is rated “overweight” with above 40% upside. The brokerage highlights accelerating revenue growth into 2026-27, modeled at roughly 20% EPS CAGR from 2026-2028, and continued expansion in SAP’s cloud backlog, which reached €63 billion in December 2024 after 40% constant-currency growth.
JPM cites SAP’s entrenched position in mission-critical enterprise software and insulation from seat-based AI impacts as key drivers.
Softcat, upgraded to “overweight” with above 35% upside, is supported by improving EPS and free cash flow growth.
JPM says the UK reseller continues to deliver “better-than-average volume growth” while one-off investment spending moderates. The brokerage also points to Softcat’s discount to long-term P/E medians, noting it trades about 22% below its 10-year average.
Temenos, also “overweight” with an over 21% upside, remains a preferred name due to its exposure to regulated financial-services software, which JPM believes is “relatively well insulated from AI.” The firm models 6-7% organic revenue growth and about 17% FCF CAGR from 2025-2028 and highlights a 50% planned expansion in sales headcount by the end of 2025, positioned to support conversion of pipeline into 2026 revenue.
AutoStore, rated “overweight” with above 20% upside, is viewed as well-placed in cubic warehouse automation. The brokerage notes that the Light AS/RS segment in which AutoStore operates is expected to grow at an “attractive CAGR,” with cubic storage expected to gain share over time, supporting the company’s positioning in logistics automation.
OVHcloud, assigned an “overweight” rating with over 20% upside, sits within JPM’s Web/Cloud Infra & Automation group. The brokerage’s estimates show Adj. EBITDA moving modestly higher versus consensus in 2025 (+1.5%) and approaching flat in 2026 (–0.2%), contributing to the return potential based on valuation.
Computacenter, rated “overweight” with above 10% upside, is identified as a key beneficiary of GenAI infrastructure demand. JPM expects all three of the firm’s major profit engines, Germany, North America and the UK, to grow EBIT year-on-year through 2026.
The brokerage says Computacenter’s exposure to hyperscaler capital spending continues to offer a “compelling” setup despite a recent re-rating relative to peers.
Amadeus, rated “overweight” with over 14% upside, is projected to deliver around 10% earnings growth in coming years, supported by leadership in global distribution and passenger service systems, with more than 40% share.
The brokerage cites ramping hospitality deals with Marriott and Accor through 2026-27, though notes that consensus estimates for 2026 “look full,” limiting earnings revision upside. JPM also flags ongoing concerns over disintermediation, including airline direct-booking and potential AI agent effects.
Capgemini, rated “neutral” with above 14% upside, rounds out the top 10. JPM describes a “balanced risk/reward” profile as revenue growth trends improve but market skepticism persists due to AI-related concerns over service-delivery deflation.
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