SAP SE (SAP) Downgraded on Slowing Cloud Backlog Growth

SAP SE (NYSE:SAP) ranks among the oversold European stocks to buy. JPMorgan downgraded SAP SE (NYSE:SAP) from Overweight to Neutral on March 24, citing a tougher near-term outlook as the company’s cloud backlog continues to expand slowly and strategic changes add uncertainty. JPMorgan analysts stated that their prior optimism in SAP was founded on “accelerating revenue growth and significant margin expansion,” but given the company’s numerous challenges, “the picture for performance has shifted.”

The slowdown in SAP’s current cloud backlog (CCB) is a major worry, and the firm anticipates that this trend will continue as the base of transferred clients grows. JPMorgan identified a possible change in SAP’s business model toward a consumption- or outcome-based framework, in addition to changes in backlog patterns.

The firm also emphasized the competitiveness in the AI agent layer, citing the rapid growth of large language model providers and rising peer investment, which might put pressure on margins and spur more M&A activity.

SAP SE (NYSE:SAP) is an enterprise software company based in Germany. It develops and provides both on-premises and cloud-based solutions to assist companies in managing human resources, supply chain management, finance, and customer experience.

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