Bubble or no bubble, this is the best stock for AI exposure: analyst
Investing.com - JPMorgan has reduced its price target on SAP (SAP:GR) (NYSE:SAP) to EUR290.00 from EUR310.00 while maintaining an Overweight rating on the stock. According to InvestingPro data, SAP is currently trading slightly below its Fair Value, with a strong financial health rating of "GOOD" and a market capitalization of $286.6 billion.
The investment bank sees a bullish fundamental setup for SAP following its third-quarter results, noting momentum in the company’s backlog heading into the fourth quarter, partly due to deal catch-up from first-half slippage.
JPMorgan highlighted comments from SAP’s CEO indicating that many previously delayed deals are now returning, alongside a strong fourth-quarter pipeline with good coverage as customers adopt the RISE platform more rapidly.
The firm believes SAP’s near-term cloud revenue is de-risked and sees potential for a share buyback announcement with fiscal year 2025 results, along with improving EBIT and free cash flow momentum as headcount grows significantly below revenue.
JPMorgan projects accelerating group revenue growth in approximately 2026 and 2027, with compelling earnings growth expected in 2026-2028, modeling approximately 20% non-IFRS EPS CAGR during that period.
In other recent news, SAP SE has been involved in several significant developments. The company recently released its third-quarter 2025 earnings, which Berenberg noted as a "solid performance" with cloud backlog growth surpassing expectations. However, Berenberg adjusted its price target for SAP to EUR280 due to foreign exchange impacts, while maintaining a Buy rating. In legal matters, o9 Solutions has filed a lawsuit against SAP, alleging misappropriation of trade secrets for use in SAP’s supply chain management software. Additionally, Germany’s cartel office is considering proceedings against SAP following a complaint by Celonis regarding data access issues. On the collaboration front, SAP has partnered with Snowflake to integrate their data platforms, enhancing AI capabilities for enterprise customers. Meanwhile, SAP made a takeover approach to BlackLine earlier this year, which was reportedly rejected. These developments highlight SAP’s active engagement in both strategic partnerships and legal challenges.
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