The thesis

SAP SE is a global software provider with a strong ERP platform, SAP S/4HANA. The company is in a favorable macro moment driven by AI Buildout, with revenue growth at 9.4% YoY and gross margin at 72.76%. The conviction score is 14/100, indicating a Watchlist status, while analyst consensus is BUY. High net margin of 20.41% and P/E of 27.5x suggest a profitable and relatively expensive business.

Why now

The AI Chip Boom is expected to continue until 2030, driving AI Capex growth, a key driver for SAP's business, with a macro signal impact of +20. SAP's strong financials and positioning in the Software, Cloud & AI Platforms theme make it an interesting setup.

What to watch

Revenue growth trajectory and margin stability over the next 1-3 quarters will be key indicators of SAP's ability to capitalize on the AI Buildout. Progress in cloud and AI platform services will also be crucial in confirming the thesis.

Key risks

Valuation risk is present with a P/E of 27.5x, indicating relatively high expectations. Execution risk is also relevant as SAP needs to continue delivering on its ERP platform and cloud services to maintain revenue growth.

Theme exposure