More than 50% upside potential with European tech! SAP, Zalando, Ionos, and naoo shares

SAP and Ionos are building the hyperscaler with Schwarz Digits

The Schwarz Group, whose core business is Lidl, has quietly developed into a major cloud provider in recent years. Similar to Amazon, it first built data centers for its own activities and then opened them up to other companies. Schwarz Digits advertises its services as being compliant with EU data protection standards and hosted in Germany. The business has recently received a boost from the controversial policies of US President Donald Trump. The vulnerability of Europe's IT infrastructure was exposed when Microsoft blocked the email account of the chief prosecutor of the International Court of Justice following Trump's sanctions.

With this tailwind, Schwarz Digits aims to become a German hyperscaler. To be able to offer more and more cloud and AI services, it is investing heavily in data centers. Unfortunately, Schwarz Digits is not listed on the stock exchange, but SAP, Ionos, and Deutsche Telekom are on board.

For example, it is working with SAP on the digitization of business processes in the cloud. "If companies and organizations want to be fit for the future, they need to modernize and digitize their core business processes in a cloud environment," says Christian Müller, Co-CEO of Schwarz Digits. "Until now, the choice has mainly been between cloud providers from non-EU countries. Through our partnership with SAP, we offer a European alternative and support European organizations in their sovereign transformation."

The aim is also to get politicians on board. As reported by Handelsblatt, SAP, Deutsche Telekom, web hosting company Ionos, and Schwarz Digits are negotiating with the European Union on a joint proposal to build a large data centre for artificial intelligence.

While SAP has long been one of the driving forces behind the DAX, Ionos has struggled for some time. With the start of the tariff disputes with the US in early April, Ionos' share price finally took off and has since risen by over 50%. Something similar could be in store for naoo.

naoo: Share price set for revaluation

Ionos demonstrated that it sometimes takes a little longer for a stock to be discovered on the stock market. A similar opportunity currently presents itself with naoo AG. The Swiss technology company operates a next-generation social media platform. It connects people based on their interests and preferences and offers a unique user experience through gamification and personalized content. naoo shares have only been listed on the Düsseldorf Stock Exchange for a few months and are still a real hidden gem. This could change soon, as the latest reports indicate that the Company could take off operationally in the second half of the year.

In the first quarter of 2025, naoo recorded a high level of order intake. It has already signed 298 campaign contracts with advertisers, including corporations such as Nestlé, BMW, and Migros, which is almost as many as in the whole of 2024. The acquisition of Kingfluencer is also contributing to this dynamic development. With the leading Swiss specialist for influencer marketing, the Company can make optimal use of its platform and win over advertisers.

The new version of the mobile naoo app was launched at the beginning of June. Among other things, the user experience has been improved with content loading times that are ten times faster. A new messaging function is intended to enhance user communication and increase usage time. In addition, the naoo platform is set to further increase opportunities for influencers. Overall, the update is intended to form the technological basis for scaling up to international markets. The infrastructure is now ready to serve millions more users.

The next milestone is set to be reached in July: "naoo Sense 2," a new AI-based feed algorithm for relevant content, is scheduled to launch. The new feed combines personal interests, trending topics, local content, and social dynamics to create a more adaptable and appealing user experience. The feed is not intended to be based solely on click behavior, as is the case with networks in the US, but rather to reflect the real-life environments of users.

The environment could hardly be better for a new social media platform in Europe. The trend toward greater independence from the US is sweeping across Europe. The Company is currently valued at less than EUR 50 million. If user growth increases in the coming months – and the chances of this are good – significantly higher prices should be possible.

Zalando: More than 50% price potential

Zalando has achieved what naoo is working on: establishing itself as a European alternative. However, after a spectacular rise from EUR 21 to EUR 49 between September 2024 and February this year, the share price has fallen noticeably again in recent months. Since the beginning of April, Zalando shares have been struggling to break through the EUR 30 mark and are currently just below it.

RBC believes the stock has significantly higher potential. While many European fashion retailers are facing problems due to high inventories, Zalando is one of the industry favorites among analysts. They see the fair value of the DAX-listed company's shares at EUR 50 and therefore recommend buying.

naoo is an exciting newcomer to the German stock market. The latest news has not yet been rewarded by the stock market, even though the environment for establishing itself as a European social media platform is more favorable than ever. Ionos is not cheap after the jump in its share price in recent weeks. However, as with SAP, momentum could continue to drive the share price higher. There is no urgent need to buy Zalando shares at present.