Mar Vista U.S. Quality Strategy's Views on SAP (SAP)?

Mar Vista Investment Partners, LLC, an investment management company, released its “Mar Vista U.S. Quality Strategy” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The third quarter was a standout period for US equities, led by optimism over the Federal Reserve’s dovish pivot and the ongoing boom in artificial intelligence (AI). The S&P 500® Index and the Nasdaq Composite surged, representing technology’s relentless momentum.  In the quarter, the strategy returned +3.29% net of fees, compared to +8.00% and +8.12% returns for the Russell 1000 Index and the S&P 500 Index, respectively. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Mar Vista U.S. Quality Strategy highlighted stocks such as SAP SE (NYSE:SAP). SAP SE (NYSE:SAP) is a leading enterprise application and business solutions provider. The one-month return of SAP SE (NYSE:SAP) was 7.34%, and its shares gained 23.30% of their value over the last 52 weeks. On October 8, 2025, SAP SE (NYSE:SAP) stock closed at $277.15 per share, with a market capitalization of $322.77 billion.

Mar Vista U.S. Quality Strategy stated the following regarding SAP SE (NYSE:SAP) in its third quarter 2025 investor letter:

"SAP SE's (NYSE:SAP) shares came under pressure during the quarter amid investor concerns that autonomous AI agents could disrupt incumbent software-as-a-service providers, alongside broader worries about IT budgets and U.S. public sector spending trends. Despite these headwinds, we believe SAP is well positioned to migrate its large, on-premises ERP customer base to its modern S4/Hana cloud platform. This transition drives a ~2.5x increase in average revenue per customer through broader service adoption.

Recent results highlight strong execution against this strategy, with current cloud backlog up 29% year-over-year, total backlog up 40%, and cloud ERP suite growth of 35% in calendar 2024. These metrics support management’s outlook for accelerating growth through 2027, underpinned by continued customer migrations and efficiency gains from cloud-based operations. We believe this transformation should drive sustained growth in revenue, earnings, and cash flow over our investment horizon."

SAP SE (NYSE:SAP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 32 hedge fund portfolios held SAP SE (NYSE:SAP) at the end of the second quarter, compared to 33 in the previous quarter. While we acknowledge the potential of SAP SE (NYSE:SAP) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered SAP SE (NYSE:SAP) and shared the list of AI stocks every investor should watch. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.