SAP AG (SAP)
NYSE:SAP
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SAP AG
(NYSE:SAP)
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Rating:69Neutral
Price Target:
$179.00
▲(9.75% Upside)
Action:ReiteratedDate:01/31/26
The score is driven primarily by strong financial quality (high margins, improving profitability, conservative leverage, and solid free-cash-flow conversion) and a supportive earnings outlook (record backlog, margin expansion, and ~€10B 2026 free cash flow target plus a €10B buyback). These positives are meaningfully offset by weak technicals (price far below major moving averages with bearish momentum) and a relatively high P/E that limits valuation support.
Positive Factors
Large cloud backlog
A €77bn cloud backlog with ~4-year average duration provides multi-year revenue visibility and recurring cash flow. This backlog underpins durable subscription revenue, smooths near-term volatility from large deals, and supports predictable margin conversion as cloud deployments ramp.
Negative Factors
Declining software license revenue
A 27% drop in legacy license sales highlights execution risk during cloud migration: lost upfront license fees can depress near-term revenue and complicate comparability. Sustained substitution requires cloud upsell to fully offset legacy decline and maintain long-term top-line growth.
Read all positive and negative factors
Positive Factors
Negative Factors
Large cloud backlog
A €77bn cloud backlog with ~4-year average duration provides multi-year revenue visibility and recurring cash flow. This backlog underpins durable subscription revenue, smooths near-term volatility from large deals, and supports predictable margin conversion as cloud deployments ramp.
Read all positive factors
SAP AG (SAP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$190.85B
Dividend Yield1.07%
Average Volume (3M)2.91M
Price to Earnings (P/E)34.3
Beta (1Y)0.97
Revenue Growth11.85%
EPS Growth167.23%
CountryUS
Employees108,187
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)1.93
Shares Outstanding1,228,504,300
10 Day Avg. Volume2,492,447
30 Day Avg. Volume2,911,034
Financial Highlights & Ratios
PEG Ratio0.27
Price to Book (P/B)5.39
Price to Sales (P/S)6.55
P/FCF Ratio30.37
Enterprise Value/Market Cap0.85
Enterprise Value/Revenue4.42
Enterprise Value/Gross Profit5.99
Enterprise Value/Ebitda12.78
Forecast
1Y Price Target
$290.83Price Target Upside78.31% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering7
EPS Forecast (FY)8.42
Revenue Forecast (FY)$47.28B
SAP AG Business Overview & Revenue Model
Company Description
SAP 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 ass...
How the Company Makes Money
SAP primarily makes money by licensing and delivering enterprise software and related services, with revenue generated through several main streams: (1) Cloud subscriptions and support: recurring subscription fees for SAP cloud applications and pl...
SAP AG Key Performance Indicators (KPIs)
Any
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.
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.
Data provided by:
The Fly
The FlySAP AG Earnings Call Summary
Earnings Call Date:Jan 29, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 23, 2026
Earnings Call Sentiment Positive
Overall the call communicated solid execution and financial strength: strong cloud revenue growth (26%), expanding cloud margins (75%), record-sized cloud backlog (EUR 77bn, +30%), improved profitability (non-IFRS operating profit EUR 10.4bn) and robust free cash flow (≈EUR 8.2bn) with an aggressive EUR 10bn buyback and a confident 2026 guidance (~EUR 10bn FCF). Headwinds include a more pronounced-than-expected moderation in current cloud backlog growth, a 27% decline in software license revenue, geopolitical/regulatory complexity prolonging deal cycles, and one-off charges (workforce transformation ≈EUR 100m; Teradata litigation ≈USD 200m). On balance the positive operational and financial momentum, backlog scale and AI/product progress outweigh the listed challenges.Positive Updates
Record Cloud Backlog and Strong Ordering
Total cloud backlog grew 30% to EUR 77 billion and current cloud backlog reached EUR 21 billion, up 25%, providing multi-year revenue visibility (average contract duration ~4 years). Q4 was the company's best bookings quarter and large deals (>EUR 5m) contributed a record 71% to cloud order entry in Q4.
Negative Updates
Slowdown in Current Cloud Backlog Growth vs. Expectations
Current cloud backlog growth was 25%, which management described as a more pronounced slowdown than anticipated and slightly below some prior expectations (guidance implied modestly higher growth). Large, complex deals with longer ramp profiles weighed on near-term CCB recognition.
Read all updates
Q4-2025 Updates
Positive
Negative
Record Cloud Backlog and Strong Ordering
Total cloud backlog grew 30% to EUR 77 billion and current cloud backlog reached EUR 21 billion, up 25%, providing multi-year revenue visibility (average contract duration ~4 years). Q4 was the company's best bookings quarter and large deals (>EUR 5m) contributed a record 71% to cloud order entry in Q4.
Read all positive updates
Company Guidance
Management guided that CCB growth should moderate only slightly in 2026 (less than the deceleration seen in 2025) while total revenue growth is expected to accelerate, backed by a record total cloud backlog of €77 billion (up 30%, ~4‑year contract duration) and a current cloud backlog of €21 billion (up 25%); key 2025 metrics cited were cloud revenue +26% (cloud ERP +32%), total revenue ≈€37 billion (+11%), cloud gross margin 75% (+1.6pp) with cloud gross profit +29%, IFRS operating profit €9.8 billion (Q4 €2.6 billion), non‑IFRS operating profit €10.4 billion, non‑IFRS EPS €6.15 (+36%), and free cash flow ≈€8.2 billion (top of the revised range), while the 2026 outlook targets record free cash flow of ~€10 billion, a midterm non‑IFRS tax rate of 28–30%, sustained operating discipline to push the expense‑to‑revenue growth ratio toward the lower end of the 80–90% operating leverage objective, and a new €10 billion two‑year share repurchase program.SAP AG Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
82
Very Positive
Cash Flow
76
Positive
| 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 | 27.14B | 24.93B | 22.53B | 21.48B | 19.73B |
| EBITDA | 11.73B | 7.08B | 8.03B | 8.28B | 10.99B |
| Net Income | 7.04B | 3.12B | 6.14B | 2.28B | 5.26B |
Balance Sheet | |||||
| Total Assets | 70.33B | 74.12B | 68.33B | 72.16B | 71.17B |
| Cash, Cash Equivalents and Short-Term Investments | 9.77B | 11.24B | 11.28B | 9.86B | 11.66B |
| Total Debt | 8.07B | 10.65B | 8.79B | 13.09B | 15.15B |
| Total Liabilities | 25.11B | 28.31B | 24.93B | 29.31B | 29.65B |
| Stockholders Equity | 44.73B | 45.44B | 43.16B | 40.13B | 38.85B |
Cash Flow | |||||
| Free Cash Flow | 7.94B | 4.42B | 5.55B | 4.77B | 5.52B |
| Operating Cash Flow | 8.65B | 5.22B | 6.33B | 5.65B | 6.22B |
| Investing Cash Flow | -1.33B | -667.00M | 906.00M | 667.00M | -3.06B |
| Financing Cash Flow | -7.85B | -3.40B | -7.73B | -6.34B | -56.00M |
SAP AG Technical Analysis
Negative
163.10
Price Trends
189.99
Negative
215.38
Negative
246.35
Negative
Market Momentum
-7.99
Negative
27.62
Positive
24.90
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 163.1 is below the 20-day moving average (MA) of 174.27, below the 50-day MA of 189.99, and below the 200-day MA of 246.35, indicating a bearish trend. The MACD of -7.99 indicates Negative momentum. The RSI at 27.62 is Positive, neither overbought nor oversold. The STOCH value of 24.90 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $86.82B | 90.88 | 15.42% | ― | 21.05% | 28.67% | |
73 Outperform | $97.05B | 50.22 | 22.20% | 0.64% | 17.14% | 41.18% | |
71 Outperform | $152.26B | 27.05 | 12.37% | 0.63% | 8.41% | 22.92% | |
69 Neutral | $190.85B | 34.25 | 16.82% | 1.07% | 11.85% | 167.23% | |
69 Neutral | $28.91B | 66.22 | 7.97% | ― | 13.35% | -60.76% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
55 Neutral | $41.87B | -48.84 | -60.27% | ― | 28.48% | -19.12% |
* Technology Sector Average
SAP
SAP AG
163.10
-94.80
-36.76%
INTU
Intuit
350.94
-237.82
-40.39%
CRM
Salesforce
164.96
-87.70
-34.71%
WDAY
Workday
112.50
-119.84
-51.58%
NOW
ServiceNow
83.00
-76.96
-48.11%
SNOW
Snowflake
121.11
-23.44
-16.22%
SAP AG Corporate Events
SAP SE Issues 2025 Integrated Report Highlighting Strong Cloud Growth and AI-Led Transformation
Mar 6, 2026
SAP SE has published its Integrated Report 2025, combining financial statements and detailed environmental, social and governance disclosures for fiscal year 2025, which covers SAP SE and its controlled subsidiaries and was released on February 26...
SAP Posts Strong 2025 Cloud Growth and Profit Surge, Launches €10 Billion Buyback
Feb 3, 2026
On January 29, 2026, SAP SE reported its fourth-quarter and full-year 2025 results, highlighting a strong acceleration in its cloud business and a marked improvement in profitability. For 2025, cloud revenue rose 23% year-on-year to €21.0 bi...
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.