SAP SE (SAP): A Bull Case Theory

We came across a bullish thesis on SAP SE on Rijnberk InvestInsights’s Substack by Daan | InvestInsights. In this article, we will summarize the bulls’ thesis on SAP. SAP SE's share was trading at $265.53 as of October 10th. SAP’s trailing and forward P/E were 41.67 and 33.11 respectively according to Yahoo Finance.

SAP (SAP) is a European enterprise software giant that has successfully transformed from a legacy vendor into a cloud-first, high-visibility software powerhouse. Its next-generation ERP platform, S/4HANA Cloud, combined with RISE with SAP, drives real-time analytics, automation, and simplified migration for global enterprises.

Over 85% of new bookings are cloud-based, and AI and automation features, including Joule Copilot and the Business Data Cloud, further enhance its platform. SAP’s systems are deeply embedded in corporate workflows, creating enormous switching costs and a durable moat, with 98%+ customer retention, which underpins predictable, resilient recurring revenues.

The company is executing one of Europe’s most successful cloud transformations, with cloud revenue up 26% YoY and cloud ERP growing 33% YoY, while its cloud backlog has increased nearly 30% to €18 billion, providing clear visibility for future growth. Investment cycles are winding down, margins are expanding, and free cash flow is rebounding to an expected €8 billion in FY2025. SAP’s net cash position and steadily growing dividend further strengthen its financial profile.

Structurally, SAP is positioned for long-term double-digit growth through the migration of its 300K+ customers to cloud subscriptions, expansion of AI-enabled features, entry into new verticals and SMEs, and rising efficiency as cloud operations scale. Despite being underappreciated in U.S. markets due to its operational complexity and European roots, SAP offers a compelling combination of scale, resilience, and compounding growth.

While the current share price may be somewhat elevated, the company remains a quietly dominant software leader with an exceptional medium- to long-term growth trajectory, making it an under-discussed gem for investors willing to wait for more attractive entry points.

Previously we covered a bullish thesis on SAP SE by FluentInQuality in May 2025, highlighting its cloud-first pivot via S/4HANA, deep enterprise integration, and strategic AI adoption driving recurring revenue. The stock has depreciated approximately 9.23% since our coverage, as market timing lagged fundamentals. The thesis still stands, and Daan | InvestInsights shares a similar view, emphasizing cloud backlog growth and long-term structural expansion.

SAP SE is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held SAP at the end of the second quarter which was 33 in the previous quarter. While we acknowledge the potential of 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.

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Disclosure: None.