Global enterprise software giant SAP C New York Stock Exchange: SABB It has reached all-time highs as its business has been lifted by the winds of artificial intelligence (AI). SAP is an abbreviation for Systems, Applications and Products in Data Processing. The company provides cloud-based business software through its leading enterprise resource planning (ERP) product.
This package integrates a comprehensive, synergistic set of business software, including accounting, human capital management (HCM), customer relationship management (CRM), project management and procurement functions into one unified platform. The company tailors its software to meet the needs of each specific industry with AI and machine learning capabilities in its core applications.
SAP is a leader in the computer and technology sector, competing with multinational enterprise software giants such as… International Business Machinery Company New York Stock Exchange: IBM, Microsoft Corporation Nasdaq: MSFT, Salesforce Company New York Stock Exchange: Customer Relationship Management and Oracle Corporation New York Stock Exchange: Oracle. Some of their major clients include businesses Clorox Company New York Stock Exchange: CLX, eBay company Nasdaq: eBay, Nvidia company Nasdaq: NVDA and Mondelez International Company Nasdaq:MDLZ.
30% of deals in Q3 involved AI use cases
Saab today
(As of 12/31/2024 at 05:32 PM ET)
- 52 week range
- $148.38
▼
$256.13
- Dividend yield
- 0.70%
- P/E ratio
- 98.48
- Price target
- $252.33
This update was certainly evident in Q3 2024 adjusted EPS growth of 6% year over year to $1.33, which beat analyst estimates by 2 cents on revenue growth of 9.4% year over year to $9.17 billion, which also beat estimates The agreed upon amount of $9.15 billion. Current cloud backlog increased 25% year over year to $15.38 billion. Cloud ERP Suite revenue rose 34% year over year to $3.67 billion. Cloud revenue rose 25% year over year to $4.35 billion.
The company has been on an ongoing transformation in the cloud, transitioning customers over the past four years, and is hitting its stride driven by AI. Powered by Gen AI Hub, nearly 30% of cloud order entries this quarter were deals containing AI use cases. SAP achieved its goal of 100 AI use cases across its portfolio. AI consumption by SAP customers more than quadrupled during the quarter. SAP has completed its $1.5 billion acquisition of digital adoption platform WalkMe.
Sustained momentum moving forward
SAP expects momentum to remain steady moving forward. They raised their cloud and software revenue forecast by $433 million midway to $31.93 billion to $32.24 billion. Cloud revenue is expected to range between $18.41 billion to $18.73 billion, maintaining its previous forecast.
While SAP does not anticipate margin risk in 2025, AI activity is expected to impact gross margins after 2025. However, the company believes AI will be margin accretive. The company has been very consistent in 2024 with the AI trend holding steady, pointing to a strong Q4 of 2024.
SAP forms an ascending triangle pattern
An ascending triangle is formed by the resistance of a flat, converging upper trend line with the support of a rising (bullish) lower trend line. A breakout occurs when a stock rises across the upper trend line. If the stock breaks down below the lower uptrend line, the pattern fails when a breakout forms.
SAP formed flat upper trend line resistance at $242.10 converging with lower up trend line support that started around the swing low at $219.55. SAP tested the upper trend line resistance nearly eight times without being able to break out, and the up trend line was tested twice. The fixed daily VWAP support is $236.35. The daily RSI is rising at the 62 range. Fibonacci (The pullback support levels (Fibonacci) are $237.30, $231.10, $224.60, and $214.65.
The average consensus price target for SAP is $252.35Which means an increase of 0.96% The analyst’s highest price target is at $300.00. It has eight analyst Buy ratings and one Hold rating. The stock has a negligible short interest of 0.11%.
Actionable options strategies: Bullish investors could consider using cash-secured sell-offs at Fibonacci retracement support levels to buy the dip. If allocated to the stock, writing a covered call at rising Fibonacci levels implements a wheel-to-income strategy plus a dividend yield of 0.69%.
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