Assessing SAP (XTRA:SAP) Valuation After New Snowflake AI Data Cloud Collaboration
Snowflake partnership sets fresh context for SAP shares
SAP (XTRA:SAP) is in focus after announcing a collaboration that links Snowflake’s AI Data Cloud with SAP Business Data Cloud, aiming to simplify data sharing and AI driven insights for enterprise customers.
See our latest analysis for SAP.
Despite the Snowflake tie up, SAP’s recent 1 day, 7 day and 90 day share price returns of 3.07%, 3.12% and 14.06% declines suggest fading short term momentum. However, its 3 year total shareholder return of 100.72% points to a much stronger longer term record.
If this kind of AI focused data story interests you, it could be worth widening your watchlist to see how other names in high growth tech and AI stocks are shaping up.
With SAP shares easing back in recent months despite annual revenue and net income growth in double digits, the key question is whether this creates a valuation gap or if the market is already pricing in future growth.
Most Popular Narrative: 29.6% Undervalued
Compared with SAP’s last close at €201.95, the most followed narrative points to a higher fair value, built on cloud conversion and AI driven earnings.
Ongoing migration to SAP cloud offerings, especially S/4HANA Cloud and RISE with SAP, is steadily increasing the mix of high-margin, subscription-based revenues, driving margin expansion and elevating earnings visibility for future periods.
Curious what sits behind this valuation gap? The narrative leans heavily on compounding revenue, firmer margins, and a premium earnings multiple tied to long term cloud growth. Want to see how those pieces fit together?
Result: Fair Value of $286.75 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, you also need to keep an eye on execution risks around complex cloud migrations, as well as the possibility that tighter regulation could pressure margins and earnings.
Find out about the key risks to this SAP narrative.
Another Angle on Valuation
The analyst narrative leans on future earnings and a fair value of €286.75, yet today SAP trades on a P/E of 33.2x versus 26.7x for the European Software group and 30.7x for peers, while our fair ratio sits higher at 38.2x. So is this a cushion or a warning sign if sentiment turns?
See what the numbers say about this price — find out in our valuation breakdown.
Build Your Own SAP Narrative
If you see the story differently or prefer to test the numbers yourself, you can create a complete SAP view in minutes with Do it your way.
A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding SAP.
Looking for more investment ideas?
If SAP sits on your watchlist already, do not stop there. Broaden your opportunity set and let the data work harder for your next move.
- Spot potential value plays early by checking out these 870 undervalued stocks based on cash flows that currently trade below what their cash flows suggest.
- Ride the AI trend more broadly by scanning these 25 AI penny stocks shaping everything from enterprise software to automation.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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