SAP SE stock has defied expectations with a remarkable 64.7% surge over the past year, leaving the S&P 500 Composite and the sub-industry trailing at 27.5% and 58.9%, respectively.
The tech giant is a behemoth in the realm of enterprise resource planning (ERP) software and boasts a global partner network spanning over 140 countries.
Driving this bullish trend is SAP’s robust performance in the cloud sector, notably propelled by offerings like Rise with SAP and Grow with SAP.
The Growth Drivers Behind SAP’s Success
SAP’s strategic focus on expanding its cloud business has paid off handsomely, evident in a 25% growth in the current cloud backlog, hitting €13.75 billion. The introduction of Rise with SAP has been a game-changer, enabling companies to undergo digital transformations with ease.
Furthermore, the increasing adoption of SAP’s S/4HANA solutions, particularly in the cloud, has bolstered its position in the tech market. With a 55% surge in SAP S/4HANA cloud revenues year over year, the company’s cloud backlog has also seen a noteworthy 58% increase.
SAP’s continuous product innovations like Grow with SAP and collaborative efforts are reinforcing its foothold in the cloud business landscape.
Forecast and Strategic Initiatives
Outlook for 2024 indicates a substantial rise in cloud revenues for SAP, with a projected range of €17-€17.3 billion, showcasing a 24-27% growth rate. Non-IFRS operating profit is estimated to climb between €7.6-€7.9 billion, marking a significant increase at cc.
Despite its positive projections, SAP has revised some metrics for 2025, emphasizing a bullish outlook with expectations of surpassing €21.5 billion in cloud revenues and over €37.5 billion in total revenues.
Challenges and Competitors in View
While SAP soars to new heights, challenges loom on the horizon in the form of softer performance in the Software license and support sector, global economic uncertainties, rising operational costs, and intense market competition.
Peer Comparison and Insight
In the broader tech landscape, other noteworthy stocks include Manhattan Associates, Watts Water Technologies, and Microsoft, each displaying promising potential in their respective spheres. While SAP leads the pack, it faces stiff competition from these impactful players.
Investors looking for growth opportunities may find this comparison informative to make informed investment decisions.
