SAP SE (SAP): A Bull Case Theory 

We came across a bullish thesis on SAP SE on Cas and DualEdge Invest’s Substack. In this article, we will summarize the bulls’ thesis on SAP. SAP SE’s share was trading at $241.75 as of November 28th. SAP’s trailing and forward P/E were 34.56 and 28.49 respectively according to Yahoo Finance.

Computer with charts

SAP, Europe’s largest software company by market capitalization at ~€288 billion, has transformed from a legacy licensing titan into a subscription-driven, cloud-first enterprise, reshaping how investors value its business. The company’s model now revolves around three self-reinforcing loops: recurring licensing revenue, post-implementation support, and consulting/R&D, creating deep customer dependency and predictable cash flows.

At the core of this transformation is RISE with SAP, its dual-path S/4HANA Cloud migration program, offering both public and private cloud options. This architecture allows SAP to capture both agility and control, appealing to global enterprises seeking standardized processes or flexible customization. The results are tangible: roughly 85% of revenue is recurring, cloud revenue is on track to reach €21.6–21.9 billion, and margins remain robust at 26.5%.

SAP operates in a €60–75 billion ERP market dominated by high switching costs, where Microsoft Dynamics 365, Oracle, and Sage compete, but none match SAP’s scale, integration depth, or lock-in. Each S/4HANA migration further entrenches the company, embedding its platform as the operational core of clients’ businesses. This lock-in not only drives recurring revenue but also positions SAP as the backbone for AI and data-driven transformations, turning software into infrastructure and infrastructure into annuity.

For investors, the story is not a flashy disruption but a re-rating opportunity. SAP’s predictable cash flows, strong pricing power, and customer stickiness justify its premium valuation. As enterprises increasingly modernize and integrate AI, SAP’s cloud and recurring revenue model offer enduring stability and long-term growth. The company now sells continuity, transformation, and operational resilience, making it a quietly dominant and strategically essential player in enterprise software.

This positions SAP as Europe’s most powerful software story, with multiple levers for value creation and limited downside given its entrenched ecosystem and structural advantages.

Previously we covered a bullish thesis on SAP SE (SAP) by FluentInQuality in May 2025, which highlighted the company’s deep enterprise integration, pivot to cloud-first S/4HANA operations, high customer stickiness, recurring revenue, and strategic AI deployment. The company’s stock price has depreciated approximately by 17.36% since our coverage. The thesis still stands, and Cas and DualEdge Invest share a similar but emphasizes ERP market context, RISE with SAP, and re-rating potential.

SAP SE is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held SAP at the end of the second quarter which was 33 in the previous quarter. While we acknowledge the risk and potential of SAP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SAP and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.