SAP SE SAP exceeded earnings expectations in its latest quarter, with Wedbush Securities analyst Dan Ives highlighting the European tech giant’s emerging role in the artificial intelligence revolution alongside industry leaders NVIDIA Corp NVDA and Microsoft Corp MSFT.
What Happened: “SAP is going to be a foundational player,” Ives told CNBC. “I think it’s going to be a huge step in the right direction on cloud checks, actually very strong for SAP.”
The German software giant’s transformation to cloud-based services continues to accelerate, with Ives noting that cloud operations now represent approximately 45% of the company’s business. This figure is projected to reach 70% by the end of next year, signaling a significant shift in SAP’s business model.
The German software giant’s transformation to cloud-based services continues to accelerate, with Ives noting that cloud operations now represent approximately 45% of the company’s business. This figure is projected to reach 70% by the end of next year, signaling a significant shift in SAP’s business model.
“This speaks to the second derivative of the AI revolution,” Ives said. “It’s not just about NVIDIA and Microsoft, SAP is now joining that AI party.”
The results come as enterprise resource planning (ERP) and logistics software providers increasingly integrate AI capabilities into their offerings. Ives positioned SAP alongside Oracle Corp ORCL, Microsoft, and Amazon.com Inc AMZN as major beneficiaries of this trend, suggesting these companies will see “incremental string from enterprises accelerating AI cloud appointment.”
The growing emphasis on AI integration in enterprise software marks a significant shift in the industry, with traditional ERP providers like SAP adapting their offerings to meet the increasing demand for AI-powered solutions.
Why It Matters: SAP reported adjusted earnings of $1.33 per share, beating the consensus estimate of $1.32. Quarterly revenue came in at $9.16 billion, slightly below the consensus estimate of $9.17 billion.
On Monday, Ives also mentioned other companies like Palantir, IBM, AMD, and Apple making significant moves in artificial intelligence.
Despite the positive earnings, SAP has been under scrutiny due to a Department of Justice investigation into allegations of overcharging U.S. government agencies. This investigation has been ongoing since at least 2022 and focuses on potential price-fixing schemes involving $2 billion worth of SAP technology sold to U.S. military and government agencies since 2014.
Price Action: SAP SE stock closed at $229.48 on Monday, down 0.42% for the day. In after-hours trading, the stock saw a notable increase, rising 3.54%. Year to date, SAP has gained 52.77%, according to data from Benzinga Pro.
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