SAP SE (SAP) AI Stock Analysis

• Market Cap: €188.82B
• Dividend Yield: 1.13%
• Average Volume (3M): 1.54M
• Price to Earnings (P/E): 26.7
• Beta (1Y): 1.08
• Revenue Growth: 9.70%
• EPS Growth: 161.70%
• Country: DE
• Employees: 108,187
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 1.62
• Shares Outstanding: 1,228,504,300
• 10 Day Avg. Volume: 1,114,652
• 30 Day Avg. Volume: 1,544,298
• PEG Ratio: 0.25
• Price to Book (P/B): 5.43
• Price to Sales (P/S): 6.60
• P/FCF Ratio: 29.40
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: €262.69
• Price Target Upside: 58.40% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 19
• EPS Forecast (FY): 7.19
• Revenue Forecast (FY): €40.35B

• Rating: 67 Neutral
• Price Target: €185.00 ▲(11.55% Upside)
• Action: Reiterated Date: 01/31/26
• Date: Action: Reiterated 01/31/26

The score is primarily supported by strong financial performance (high margins, improved 2025 profitability, solid free cash flow, and reduced leverage). This is meaningfully offset by weak technicals, with the stock trading below all key moving averages and negative momentum indicators. Valuation is moderately premium with only modest support from the dividend yield.

Positive Factors

High margins and improved operating profitability

Sustained high gross (~73%) and 2025 EBIT (~32%) reflect strong software unit economics and pricing power. This supports durable operating leverage and cash generation, enabling reinvestment in product development, M&A and capital returns over a multi-year horizon.

Strong free cash flow generation

Robust FCF (~€8.3B) and OCF (~€9.0B) in 2025, with FCF/net income ~0.85–0.92, indicate good cash conversion and earnings quality. Durable cash generation supports sustained investment in cloud/AI, shareholder returns, and balance-sheet de-risking across economic cycles.

Structural cloud backlog and AI-driven product adoption

A 30% rise in cloud backlog to €77B and Business AI included in two-thirds of cloud orders show structural momentum to recurring, higher-margin SaaS with differentiated AI capabilities. Large backlog provides multi-year revenue visibility and stronger customer stickiness.

Negative Factors

Volatile net profitability and cash flows

Marked swings in net margins and cash flow across years reduce earnings predictability. For a large enterprise software company, this complicates capital allocation, makes multi-year planning harder, and weakens visibility into sustainably achievable profits for investors and management.

Cash conversion inefficiency / working-capital timing

OCF persistently below reported operating profit indicates working-capital or timing inefficiencies. Over time this impairs the translation of accounting profits into spendable cash, potentially constraining investment, dividends or buybacks during stress periods.

Rising assets with flat equity and uneven ROE

Total assets rising while equity is roughly flat and ROE showing variability suggests growing asset base without consistent increases in shareholder capital efficiency. This may reflect lower returns on incremental investments and could limit long-term shareholder value creation.

SAP SE Business Overview & Revenue Model

Company Description

SAP SE, together with its subsidiaries, operates as an enterprise application software company worldwide. The company operates through three segments: Applications, Technology & Support; Qualtrics; and Services. It offers SAP S/4HANA, an ERP suite with intelligent technologies, such as artificial intelligence, machine learning, and advanced analytics; SAP SuccessFactors Human Experience Management provides cloud-based solutions, such as a human resources management system for core HR and payroll, talent management, employee experience management, and people analytics; and intelligent spend management solutions, including products branded under the SAP Ariba, SAP Concur, and SAP Fieldglass names. The company also provides SAP customer experience solutions; SAP Business Technology platform that enables customers and partners to extend and customize SAP applications in a cloud-native way; and SAP Business Network that enable companies to extend their ecosystem, react to supply chain disruptions, discover new trading partners, and find new opportunities. In addition, it offers business process intelligence solutions aim to help customers analyze their operations, understand their process bottlenecks, and improve their business process landscape; Experience solutions; SAP's industry cloud provides modular solutions addressing industry-specific functions; and SAP's ecosystem build, sell, service, and run SAP solutions and technology, as well as sustainable business solutions, services, and partnerships solutions. SAP SE was founded in 1972 and is headquartered in Walldorf, Germany.

How the Company Makes Money

SAP generates revenue primarily through software licensing, cloud subscriptions, and maintenance services. The company offers various licensing models, including perpetual licenses and subscription-based licenses for its cloud offerings. A significant portion of revenue comes from its cloud services, which have seen rapid growth as businesses increasingly adopt cloud technologies. Additionally, SAP earns revenue from support and maintenance contracts for its software products, providing ongoing services and updates. The company also benefits from strategic partnerships with technology firms and system integrators, which enhance its market reach and capabilities, contributing to its overall earnings.

SAP SE Financial Statement Overview

Summary

Strong underlying software economics with high gross margin (~73%), a notable 2025 step-up in operating profitability (EBIT margin ~32%), and improving free cash flow (~€8.3B). Balance-sheet leverage has improved materially (debt-to-equity down to ~0.18). The main risk is volatility in net profitability and year-to-year cash-flow swings (notably 2022 and 2024), which reduces consistency.

Income Statement

Revenue shows a clear upward trend from 2022–2025, capped by an exceptional 2025 growth print. Profitability is strong in 2025 with high gross margin (~73%) and materially improved operating profitability (EBIT margin ~32%) versus 2024. A key weakness is earnings consistency: net margin swung sharply (2022/2024 much lower than 2021/2023/2025), indicating periodic profitability volatility even as top-line growth improved.

Balance Sheet

Leverage looks conservative and improving, with debt-to-equity declining meaningfully from 2020 (~0.54) to 2025 (~0.18), supporting balance-sheet resilience. Equity remains large and relatively stable over time, providing a solid capital base. Offsetting this, total assets have risen while equity has been roughly flat (2023–2025), and return on equity (where provided) has been uneven, suggesting variability in how efficiently the balance sheet converts capital into profits.

Cash Flow

Cash generation is strong and improving in 2025, with operating cash flow rising to ~€9.0B and free cash flow to ~€8.3B, alongside a sharp rebound in free-cash-flow growth versus 2024. Free cash flow closely tracks earnings (free cash flow to net income ~0.85–0.92 across years), indicating generally good earnings quality. The main drawback is that cash flow has been choppy year-to-year (notably weaker 2024), and operating cash flow remains below reported operating profit (coverage ratios well below 1), implying working-capital or timing effects periodically weigh on cash conversion.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	36.80B	34.18B	31.21B	29.52B	26.95B
Gross Profit	27.04B	24.93B	22.53B	21.48B	19.73B
EBITDA	13.17B	6.47B	7.16B	6.32B	10.33B
Net Income	7.33B	3.12B	6.14B	2.28B	5.26B
Balance Sheet
Total Assets	70.36B	74.12B	68.33B	72.16B	71.17B
Cash, Cash Equivalents and Short-Term Investments	9.77B	11.24B	11.28B	9.70B	11.66B
Total Debt	8.07B	10.65B	8.79B	13.09B	15.14B
Total Liabilities	25.13B	28.31B	24.93B	29.31B	29.65B
Stockholders Equity	44.75B	45.44B	43.16B	40.19B	38.85B
Cash Flow
Free Cash Flow	8.26B	4.42B	5.55B	4.77B	5.42B
Operating Cash Flow	9.00B	5.22B	6.33B	5.65B	6.22B
Investing Cash Flow	-1.39B	-667.00M	906.00M	667.00M	-3.06B
Financing Cash Flow	-8.17B	-3.40B	-7.73B	-6.34B	-56.00M

SAP SE Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 165.84
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DE:SAP, the sentiment is Negative. The current price of 165.84 is below the 20-day moving average (MA) of 171.78, below the 50-day MA of 191.55, and below the 200-day MA of 226.69, indicating a bearish trend. The MACD of -6.53 indicates Negative momentum. The RSI at 37.52 is Neutral, neither overbought nor oversold. The STOCH value of 31.15 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DE:SAP.

SAP SE Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AOF	69 Neutral	€1.28B	27.30	74.27%	1.88%	10.61%	12.46%
MUM	69 Neutral	€641.30M	21.27	34.89%	4.15%	-33.50%	-6.00%
SAP	67 Neutral	€188.82B	26.71	16.86%	1.13%	9.70%	161.70%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
TMV	61 Neutral	€703.84M	5.95	113.84%	―	11.14%	0.92%
NEM	59 Neutral	€7.46B	37.32	24.84%	0.59%	25.17%	19.52%