Markets are once again hungry for risk following news of the Iran ceasefire, and one area of the market looking particularly juicy is European tech. Many of these companies remain tremendously undervalued compared to their peers and historical averages, and now trends are emerging that point to a tech revival in Europe. These three companies could be the best way to play this growing rally.
Why European Tech Stocks Have More Room to Rally
returned 17% in 2025, its best year since 2021, and entered 2026 with a trio of tailwinds: falling interest rates, fiscal expansion as Germany released its debt brake, and a rotation out of overvalued U.S. tech. But markets can turn on a dime, and European stocks plummeted as bombs began falling in Iran. Add in a tariff scare, and the STOXX 600 index dropped nearly 12% in a month on worries that many E.U. economies were about to fall into recession.
On the day the April 8 ceasefire was announced, the STOXX 600 posted its best gain in more than four years, surging 3.7% by the close of trading. Europe is highly dependent on energy imports from the Middle East, so it wasn’t a surprise to see European indices jump higher than their U.S. counterparts. Instead, the surprise came from the outperformance of the European tech sector, which surged more than 5% despite being relatively insulated from oil shocks.
European tech outperforming the broader index not only hints that risk-seeking behavior is returning to the market, but also suggests that institutional investors are likely behind the move. Tech stocks in Europe have underperformed so far in 2026, and several large-cap names have taken the brunt of the selling. However, now that tariff and Iran war headwinds are beginning to fade, investors could be starting to bargain hunt in the tech bin, and several major European firms are trading at valuations well below historical norms.
These European tech stocks don’t just have attractive valuations; technical tailwinds are also taking shape. When technical alarms start blaring, it usually means institutional investors have started pushing their weight around. Each of the three companies listed below has fundamental and technical catalysts on the horizon that could finally ignite their shares.
1. SAP: Management Shows Confidence With Share Repurchase Program
Few companies in the European tech sector have been hit harder than so far in 2026. The stock is down more than 25% year-to-date (YTD), bringing it back to levels not seen since early 2024. A poor guidance figure was the primary driver of the drawdown, as management reported moderating growth in the current cloud backlog during its Q4 2025 earnings release in January. But the total cloud backlog still stands at over 77 billion euros (approximately $87 billion), and gross margins are still approaching 75%, so this reaction is likely related to both geopolitical tensions and individual business concerns. Management remains confident, announcing a new €10 billion (approx. $11.3 billion) buyback program over two years, which would be 10% of available shares at current depressed prices.
The April ceasefire news saw SAP shares finally break out of their downtrend, and now the underlying indicators are turning positive. The Relative Strength Index (RSI) has pushed into bullish territory above 50, and the Moving Average Convergence Divergence (MACD) indicator performed a bullish crossover before the ceasefire news even reached the market.
2. Spotify: Suppressed Valuation Despite Revenue Growth and Margin Expansion
also felt the wrath of European investors earlier this year, dropping nearly 30% in January before any hints of war in Iran occurred. CEO Daniel Ek stepped into the role of executive chairman, and advertising slowed more quickly than expected in Q4 2025. But the company still reported revenue that was up 13% YOY, and 33.1% gross margins were up over 80 basis points YOY. Monthly active users are still growing, and management expects to exceed the €2.9 billion (approx. $3.4 billion) free cash flow pile it accumulated in 2025.
Despite growing revenue and margins, SPOT trades at the lower end of its historical valuation range at 33 times forward earnings. But if the company can grow Q1 2026 revenue by 15% as projected, the margin growth will lead to serious compounding. The stock has already started its breakout; SPOT shares are now using the 50-day SMA as support, and the RSI continues to show increasing upward momentum.
3. : No Longer Buoyed by Tencent Stake
Internet company Prosus NV has a 23% stake in Chinese tech giant Tencent Music Entertainment Group, which it acquired in 2021 for $14.6 billion. Having this stake in Tencent allows Prosus investors to gain exposure to both companies in a single package, and the current value of the Tencent stake exceeds Prosus’s market cap. And since the stock is trading at such a discount to net asset value, management has begun instituting buybacks under new CEO Fabricio Bloisi.
Like SAP, Prosus shares recently broke out of a deep spiral. The stock was down nearly 30% YTD, but a recent surge broke the long-term downtrend line that had held since late 2025. Bullish signals on the MACD and RSI also suggest this breakout could be legitimate, so keep an eye on OTC stocks like Prosus as well.
