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SAP AG (SAP)
NYSE:SAP
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SAP AG (SAP) AI Stock Analysis

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SAP

SAP AG

(NYSE:SAP)

Rating:74Outperform
Price Target:
$322.00
▲(18.31% Upside)
SAP's overall stock score is driven by strong financial performance and positive earnings call insights, highlighting robust growth in cloud revenue and strategic partnerships. However, the high P/E ratio suggests overvaluation, and technical indicators point to potential short-term weakness. Global market uncertainties and challenges in traditional software sales also pose risks.
Positive Factors
Cloud Revenue
SAP delivered a solid revenue quarter with cloud revenue accelerating towards the upper end of FY guidance.
Company Growth
Management intends to hire several thousand employees in H2, signaling growth and confidence in future operations.
Long-term Potential
SAP is well-positioned for the long term and has a high degree of potential for cloud conversion.
Negative Factors
Decision Making Delays
There is risk from delays in decision making in the US public sector and manufacturing industry, which could impact SAP's conversion ratios.
Foreign Exchange Impact
Foreign exchange emerged as a material headwind with management guiding for a -300bps headwind.
Macro Uncertainty
Management anticipates a slight CCB growth deceleration in 2H25 due to macro uncertainty and elongated sales cycles.

SAP AG (SAP) vs. SPDR S&P 500 ETF (SPY)

SAP AG Business Overview & Revenue Model

Company DescriptionSAP SE, together with its subsidiaries, provides applications, technology, and services worldwide. It offers SAP S/4HANA that provides software capabilities for finance, risk and project management, procurement, manufacturing, supply chain and asset management, and research and development; SAP SuccessFactors solutions for human resources, including HR and payroll, talent and employee experience management, and people and workforce analytics; and spend management solutions that covers direct and indirect spend, travel and expense, and external workforce management. The company also provides SAP customer experience solutions; SAP Business Technology platform that enables customers and partners to build, integrate, and automate applications; and SAP Business Network, a business-to-business collaboration platform that helps digitalize key business processes across the supply chain and enables communication between trading partners. In addition, it offers SAP Signavio to help customers to discover, analyze, and understand their business process operations; SAP's industry cloud solutions that provides modular solutions addressing industry-specific functions; Taulia solutions for working capital management to help enable customers mitigate the effects of inflation by providing visibility into working capital and access to liquidity; and sustainability solutions and services. SAP SE was founded in 1972 and is headquartered in Walldorf, Germany.
How the Company Makes MoneySAP generates revenue primarily through software licenses, cloud subscriptions, and support services. The company has shifted its focus towards cloud-based offerings, which provide recurring subscription revenue. Key revenue streams include software licenses for on-premise solutions, maintenance and support services for existing software, and cloud services, which encompass platform-as-a-service (PaaS) and software-as-a-service (SaaS) solutions. Additionally, SAP benefits from strategic partnerships with major technology companies and system integrators, enhancing its market reach and enabling collaborative solutions. The growing demand for digital transformation across industries has also contributed to SAP's earnings, as organizations increasingly invest in integrated software solutions to streamline operations and improve efficiency.

SAP AG Key Performance Indicators (KPIs)

Any
Any
Cloud Backlog
Cloud Backlog
Reflects the total value of future cloud service contracts, providing insight into anticipated revenue streams and the strength of customer demand for SAP's cloud offerings.
Chart InsightsSAP's cloud backlog has shown consistent growth, reaching EUR 18 billion by mid-2025, reflecting a 28% increase. This momentum is supported by strong performance in the Cloud ERP Suite and strategic partnerships with major companies like Alibaba and L'Oreal. Despite currency headwinds and global market uncertainties, SAP's focus on cloud solutions and AI-driven innovations is driving significant revenue growth and operational efficiency, positioning the company well for future expansion. However, challenges remain with declining software license revenue and elongated sales cycles in certain sectors.
Data provided by:Main Street Data

SAP AG Earnings Call Summary

Earnings Call Date:Jul 22, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Oct 22, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong financial performance and strategic advancements, particularly in cloud growth and product innovation. However, there are challenges in the U.S. public sector and uncertainties in global trade affecting sales cycles.
Q2-2025 Updates
Positive Updates
Strong Cloud Revenue Growth
Cloud revenue rose 28% in Q2, driven by the Cloud ERP Suite, which has expanded over 30% for 14 consecutive quarters. The current cloud backlog also grew by 28% to EUR 18 billion.
Significant Operating Profit Increase
Q2 operating profit surged 35%, highlighting the strength of SAP's business model and improvements in its cost base.
Major Strategic Partnerships
SAP entered a strategic partnership with Alibaba to roll out SAP Business Suite at Alibaba and address the market potential in China. Other key wins include GSK, Balmain, and Replay.
Successful Product Innovation
SAP released 14 AI agents in H1 and plans to reach 40 by year-end, enhancing productivity across various business functions. The SAP Business Data Cloud has also seen strong adoption.
Resilient Financial Performance
Total revenue grew by 12%, with a strong performance in APJ and EMEA regions. Operating cash flow increased by 71% to EUR 2.6 billion, and free cash flow rose by 83%.
Negative Updates
Challenges in the U.S. Public Sector
Uncertainty and extended approval workflows in the U.S. public sector have impacted sales cycles.
Geopolitical and Trade Uncertainty
Ongoing geopolitical developments and trade policy uncertainty have elongated sales cycles in sectors like industrial and manufacturing.
Decline in Software Licenses Revenue
Software licenses revenue decreased by 13% in Q2 as customers advance their transformation journeys towards the cloud.
Disappointing Transactional Business
Transactional part of the cloud business was disappointing, particularly in areas like temporary workforce and travel.
Company Guidance
During the SAP Q2 and Half Year 2025 Financial Results Conference Call, several key metrics were highlighted. SAP reported a 28% increase in cloud revenue for Q2, with the Cloud ERP Suite driving this momentum by expanding at a rate of over 30% for 14 consecutive quarters. Total revenue growth continued to accelerate, reaching 12%, and the current cloud backlog grew by 28%, amounting to EUR 18 billion despite currency headwinds. Operating profit surged by 35%, reflecting the strength of SAP’s business model and successful cost management strategies. The non-IFRS cloud gross margin expanded by 1.8 percentage points to 75.2%, contributing to a 31% increase in cloud gross profit. The company's strategic focus on Business AI and transformation programs has helped decouple expense growth from revenue growth, contributing to a robust financial performance and positioning SAP well for the second half of 2025.

SAP AG Financial Statement Overview

Summary
SAP exhibits strong financial health with impressive growth in revenue and profitability metrics. The balance sheet is solid with low leverage, providing stability. Cash flow generation is robust, supporting strategic investments and shareholder returns. While the financial outlook remains positive, close attention should be paid to maintaining equity levels amidst dynamic market conditions.
Income Statement
85
Very Positive
SAP's income statement shows a solid financial performance with a consistent growth trajectory. The TTM (Trailing-Twelve-Months) total revenue increased to $35.89 billion, reflecting continuous expansion. The gross profit margin stands at 73.5%, indicating efficient cost management. The net profit margin improved to 18.4%, showcasing strong profitability. EBIT and EBITDA margins were healthy at 25.1% and 30.2%, respectively, supporting robust operational efficiency.
Balance Sheet
78
Positive
The balance sheet reflects a stable financial position with a debt-to-equity ratio of 0.21, indicating low leverage and prudent financial management. The equity ratio is 59.9%, showing a solid capital structure. Return on equity (ROE) is strong at 16.1%, underscoring efficient use of equity capital. However, the slight decrease in stockholders' equity over the periods warrants monitoring.
Cash Flow
82
Very Positive
SAP's cash flow statement highlights a positive trend with a TTM operating cash flow of $7.28 billion. The free cash flow to net income ratio is 0.98, demonstrating effective conversion of earnings to cash flow. Free cash flow growth rate is notable at 46.8% over the previous period, indicating robust cash generation capabilities. The operating cash flow to net income ratio is healthy at 1.1, reflecting strong cash profitability.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue35.89B34.18B31.21B29.52B26.95B27.34B
Gross Profit26.38B24.93B22.60B21.48B19.73B19.45B
EBITDA10.82B6.47B7.50B6.48B8.92B8.26B
Net Income6.59B3.12B6.14B2.28B5.26B5.14B
Balance Sheet
Total Assets68.40B74.12B68.33B72.16B71.17B58.48B
Cash, Cash Equivalents and Short-Term Investments10.18B11.24B11.28B9.86B11.66B6.95B
Total Debt8.76B10.65B8.79B13.09B15.15B15.46B
Total Liabilities27.00B28.31B24.93B29.31B29.65B28.55B
Stockholders Equity41.00B45.44B43.16B40.13B38.85B29.71B
Cash Flow
Free Cash Flow6.49B4.42B5.55B4.77B5.42B6.38B
Operating Cash Flow7.28B5.22B6.33B5.65B6.22B7.19B
Investing Cash Flow-394.96M-667.00M906.00M667.00M-3.06B-2.99B
Financing Cash Flow-6.04B-3.40B-7.73B-6.34B-56.00M-4.00B

SAP AG Technical Analysis

Technical Analysis Sentiment
Negative
Last Price272.16
Price Trends
50DMA
290.21
Negative
100DMA
288.70
Negative
200DMA
274.34
Negative
Market Momentum
MACD
-5.40
Negative
RSI
38.74
Neutral
STOCH
56.72
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SAP, the sentiment is Negative. The current price of 272.16 is below the 20-day moving average (MA) of 278.68, below the 50-day MA of 290.21, and below the 200-day MA of 274.34, indicating a bearish trend. The MACD of -5.40 indicates Negative momentum. The RSI at 38.74 is Neutral, neither overbought nor oversold. The STOCH value of 56.72 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SAP.

SAP AG Risk Analysis

SAP AG disclosed 13 risk factors in its most recent earnings report. SAP AG reported the most risks in the "Tech & Innovation" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

SAP AG Peers Comparison

Overall Rating
UnderperformOutperform
Sector (54)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$190.83B115.4716.95%21.12%43.91%
74
Outperform
$315.98B44.6215.34%0.97%10.95%161.61%
73
Outperform
$61.63B106.756.66%14.21%-62.56%
73
Outperform
$244.97B40.0810.31%0.64%7.97%14.85%
71
Outperform
$186.06B48.7920.29%0.62%15.63%30.62%
65
Neutral
$79.63B-42.45%28.37%-35.49%
54
Neutral
$297.86M3.07-5.40%2.71%5.76%-75.96%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
SAP
SAP AG
272.16
57.03
26.51%
INTU
Intuit
667.00
46.20
7.44%
CRM
Salesforce
256.25
9.64
3.91%
WDAY
Workday
230.82
-29.50
-11.33%
NOW
ServiceNow
917.46
81.60
9.76%
SNOW
Snowflake
238.66
128.25
116.16%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 12, 2025