SAP SE (SAP) has delivered impressive results in 2025, and the tech stock is up 11% year-to-date despite ongoing macro uncertainty. The enterprise software giant reported accelerating revenue growth and expanding margins in Q2, driven by continued momentum in its Cloud ERP Suite business.
Currently trading at around €237, SAP stock is below the average analyst price target of €289, suggesting a potential upside of approximately 22% over the next 12 months.
But can the company sustain its growth trajectory as it navigates tariff concerns, public sector delays, and the transition to AI-powered business applications?
Unlock our Free Report: 5 AI compounders that analysts believe are undervalued and could deliver years of outperformance with accelerating AI adoption (Sign up for TIKR, it’s free) >>>
Analyst Price Targets Suggest Modest Upside
Wall Street maintains a cautiously optimistic view on SAP. The consensus price target of €289 implies roughly 22% appreciation from current levels, with forecasts tightly clustered:
- High estimate: ~€345/share
- Low estimate: ~€192/share
- Median target: ~€295/share
- Ratings: 17 Buys, 6 Outperforms, 1 Hold, 1 Underperform, 1 Sell
This relatively tight range reflects confidence in SAP’s core cloud migration story but also acknowledges execution risks tied to macro headwinds.
The company has been transparent about elongated sales cycles in the U.S. public sector and manufacturing segments affected by tariff uncertainty.
See analysts’ growth forecasts and price targets for SAP (It’s free!) >>>
SAP: Growth Outlook and Valuation
The company’s fundamentals appear steady and well-balanced:
- Revenue Growth (CAGR 2025–2029): ~12.3%
- Net Margin: ~21%
- EPS growth (CAGR 2025-2029): 18.1%
Today, SAP stock trades at a forward price-to-earnings multiple of 37x. If we assume an earnings multiple of 34x, the tech stock should trade at €397.08 in early 2029, indicating an upside potential of 67% from current levels.
Value stocks like SAP in as little as 60 seconds with TIKR (It’s free) >>>
What’s Driving the Optimism for SAP Stock?
SAP’s investment case rests on several durable advantages. The company sits at the center of enterprise operations for tens of thousands of businesses globally. Switching costs are enormous when ERP systems touch every process from procurement to production to payroll.
The cloud migration still has years of runway, given that about one-third of SAP’s maintenance-paying customers currently pay for both cloud and on-premise licenses, meaning two-thirds have not yet fully transitioned.
With the 2030 end-of-support deadline for older ECC systems approaching, migration momentum is expected to accelerate.
Management’s partnership with Alibaba to address the Chinese market signals confidence in geographic expansion.
While China’s revenue is relatively small today (mid-single digits as a percentage of total), it offers meaningful upside as both multinational and domestic Chinese companies modernize their systems.
Finally, SAP’s sovereignty cloud offerings differentiate it from U.S. hyperscalers. As European governments and defense contractors prioritize data residency and independence,
SAP’s ability to deliver sovereignty across the entire stack, from infrastructure to applications, becomes a competitive advantage.
Bear Case: Growth Sustainability Questions
The primary concern is whether SAP can sustain mid-teens revenue growth as the easier part of cloud migrations comes to a close. Once customers migrate to S/4HANA Cloud, will they continue to invest in adjacent products like SuccessFactors, Ariba, and now BDC?
SAP’s net retention rate must remain above 120% to justify its current growth expectations. That means the average customer must increase their spending by at least 20% annually through cross-sell and upsell efforts. It’s achievable given the breadth of the portfolio, but execution matters.
There’s also the question of AI pricing models. SAP currently charges per-user for AI features, but as the technology eliminates jobs, that model may need to shift toward consumption-based or outcome-based pricing.
Management acknowledged this transition is coming, but hasn’t detailed how it will protect revenue as automation reduces headcount needs.
Verdict: Compelling Growth Story with Moderate Upside
SAP presents a balanced risk-reward profile. The cloud migration provides multi-year revenue visibility, AI is already driving measurable value for customers, and management has proven it can expand margins while investing in innovation.
The 22% upside to analyst targets looks achievable if the company executes on its pipeline and macro conditions stabilize. Long-term, a path to €400+ exists if SAP successfully monetizes BDC, mid-market offerings, and AI agents at scale.
For investors seeking exposure to enterprise digital transformation with less volatility than pure-play SaaS companies, SAP warrants consideration. The dividend (currently around a 1.1% yield) provides some downside cushion, though this isn’t primarily an income play.
The key questions for the next few quarters: Can SAP close its backlog of delayed deals? Will Cloud ERP Suite growth hold above 30%? And how quickly can BDC scale from early wins to meaningful revenue contribution?
If management delivers on these fronts, the stock should work its way toward and potentially through analyst targets over the next 12 to 18 months.
AI Compounders With Massive Upside That Wall Street Is Overlooking
Everyone wants to cash in on AI. But while the crowd chases the obvious names benefiting from AI like NVIDIA, AMD, or Taiwan Semiconductor, the real opportunity may lie on the AI application layer where a handful of compounders are quietly embedding AI into products people already use every day.
TIKR just released a new free report on 5 undervalued compounders that analysts believe could deliver years of outperformance as AI adoption accelerates.
Inside the report, you’ll find:
- Businesses already turning AI into revenue and earnings growth
- Stocks trading below fair value despite strong analyst forecasts
- Unique picks most investors haven’t even considered
If you want to catch the next wave of AI winners, this report is a must-read.
Click here to sign up for TIKR and get your free copy of TIKR’s 5 AI Compounders report today.