As fourth-quarter earnings season nears, BofA Securities has highlighted businesses it sees as best positioned to navigate a landscape shaped by AI-driven disruption, ongoing cost discipline and irregular enterprise spending patterns. While macroeconomic uncertainty remains, the firm’s analysis singles out several names with what it describes as durable competitive advantages, improving financials and potential catalysts that could release shareholder value in 2026.
Overview
BofA’s shortlist spans a large-cap enterprise-software leader and a collection of companies in travel technology, fintech and payments. The bank’s work emphasizes companies with recurring revenue profiles, margin improvement and strategic initiatives tied to AI adoption or product modernization.
SAP SE
BofA points to SAP as the sector’s top large-cap pick, citing accelerating cloud adoption and a clear AI monetization pathway. The company’s most recent fourth-quarter results showed solid revenue and a significant increase in operating profit - a 31% rise to 2.42 billion. The report highlighted continued momentum in AI adoption across SAP’s ERP portfolio, with SAP Business AI featuring in two-thirds of Q4 cloud orders.
For the full year, cloud revenue growth held at 26%, while backlog expanded by 25%. BofA notes that SAP’s 2026 cloud guidance of 2.8-26.2 billion was lighter than some investors had hoped. Nevertheless, the company’s high recurring revenue base - 86% of total revenue - and improving operating margins (28.3%, up 4.5 percentage points) underpin the firm’s positive view.
BofA also highlights SAP’s near-term cash profile: free cash flow almost doubled to 2.24 billion. The bank points out a strategic shareholder return move as well - a new 2 billion buyback program scheduled to begin in February 2026 - as a reinforcing factor for investor value.
Sabre
Within travel software, BofA identifies Sabre as a turnaround opportunity as global travel volumes return to more normal levels and the company advances a technology modernization agenda. Management’s efforts to reduce technical debt, improve operational efficiency and scale next-generation retailing and distribution products are central to the thesis.
These initiatives are expected to help expand margins and strengthen Sabre’s competitive stance versus industry peers. As airlines increasingly adopt advanced merchandising tools and dynamic pricing, BofA says Sabre is positioned to capture incremental revenue. The bank assigns a "buy" rating based on confidence in continued execution and operating leverage.
Klarna
BofA highlights Klarna, a private fintech platform, as entering a phase of disciplined growth. The bank’s view emphasizes improved credit performance, stronger monetization across both merchants and consumers, and targeted investments in AI-driven customer engagement.
Klarna’s scale in buy-now-pay-later and related financial services provides a foundation for longer-term expansion, according to BofA. The firm notes the companys strong brand, a tightening cost structure and advancing AI capabilities as supportive elements for its outlook within the broader payments ecosystem.
Paysafe
Paysafe is characterized by BofA as an operator undergoing stabilization, with management focused on portfolio simplification and cost efficiencies. The bank points to incremental progress in key areas such as digital wallets and iGaming payments, while noting top-line momentum remains more muted compared with sector peers.
Profitability has shown improvement and the balance sheet is strengthening, but competitive pressures and moderate organic growth limit the upside case in BofAs view. The firm adopts a "neutral" stance on Paysafe, framing it as a steady operator rather than a high-conviction outperformer in the current market environment.
Bottom line
BofAs analysis concentrates on businesses with recurring revenue, margin improvement and concrete AI or modernization initiatives. While the bank is selective amid macro uncertainty, it sees differentiated opportunities in enterprise software, travel technology and fintech/payments that could generate meaningful shareholder value heading into 2026.