SAP (XTRA:SAP) Valuation Check as New AI Cloud Moves and Energy Deals Take Center Stage

SAP (XTRA:SAP) is back in focus after a flurry of AI centric cloud moves, from launching its EU AI Cloud to securing RISE with SAP deals in energy, all while U.S. regulators scrutinize EU digital tax policy.

See our latest analysis for SAP.

Those AI centric cloud wins and new partnerships come against a tricky backdrop, with the share price down meaningfully on a year to date basis, but a strong three year total shareholder return suggesting long term momentum is still intact.

If SAP’s moves in enterprise AI have your attention, it might be a good moment to compare it with other high growth tech names and explore high growth tech and AI stocks.

With the share price lagging in 2025 despite solid double digit profit growth and a sizable discount to analyst targets, investors face a key question: is SAP quietly undervalued, or is the market already baking in its next leg of AI led growth?

Most Popular Narrative: 27.9% Undervalued

Compared with SAP’s last close of €206.75, the most followed narrative points to a materially higher fair value anchored in cloud and AI expansion.

The accelerating global push for digital supply chain resilience and business process digitalization is enlarging SAP's addressable market, as evidenced by record cloud backlog, robust new pipeline development (including post Sapphire event momentum), and consistently strong double digit growth in cloud ERP.

Read the complete narrative.

Want to see how this growth story translates into upside potential? The narrative quietly leans on ambitious revenue gains, fatter margins, and a premium future earnings multiple. Curious how those moving pieces combine into that higher fair value target?

Result: Fair Value of €286.75 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, execution is not risk free, with tougher data sovereignty rules and slower customer migrations potentially squeezing margins and delaying the anticipated cloud-driven earnings inflection.

Find out about the key risks to this SAP narrative.

Another Way to Look at Value

On earnings multiples, SAP looks pricey, trading around 34 times earnings versus roughly 25.8 times for the wider European software space and 30.6 times for peers. Yet our fair ratio suggests closer to 38 times, which hints the market may still be underestimating AI fueled upside. Which signal do you trust?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own SAP Narrative

If you see the story differently or want to stress test the assumptions with your own research, you can build a custom view in just a few minutes: Do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding SAP.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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