SAP gains after JPMorgan upgrades stock as ’AI moves from pilot to production’

JPMorgan has upgraded SAP's stock rating to Overweight from Neutral, with an increased price target of EUR275.00 from EUR175.00. The firm's decision reflects the transition of artificial intelligence from pilot projects to production, which they believe benefits SAP's systems of record. SAP's AI capabilities, notably its own offerings, are also improving, according to the analyst.

The company sees enterprises increasingly valuing clean, unified data, security, governance, and predictable costs for scaling AI, factors that favor incumbent systems like SAP. Customer and partner feedback suggests improvement and early signs of traction for SAP's AI solutions. JPMorgan's analysis indicates recent additions to SAP's implied organic year-over-year cloud backlog have moved higher.

The firm has raised its 2026-2028 non-IFRS EBIT and earnings per share estimates by low-to-mid single digits, driven largely by better margin expansion. SAP's current gross profit margin stands at 74% with an 18% return on equity. Analyzing these factors, the stock appears undervalued at present levels. For comprehensive insights, investors can refer to SAP's detailed Pro Research Report.

SAP's recent third-quarter 2026 results surpassed expectations, reporting adjusted earnings of $2.14 per share on $11.64 billion in revenue, a first-ever cloud revenue surpassing $10 billion with a 25% increase in constant currency. This strong performance in the cloud segment has drawn positive attention from analysts, with Goldman Sachs raising its price target to €258 and BMO Capital increasing it to $265, both maintaining a Buy and Outperform rating respectively, citing SAP's resilience in cloud business bookings despite global economic challenges.