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How Will SAP's AI Platform Support Cloud Revenue Growth?
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Key Takeaways
SAP's cloud revenue rose 24% to euro 6.3 billion, while current cloud backlog grew 26%.
AI and SAP Business Data Cloud featured in more than 90% of its 50 largest deals.
SAP plans nearly 50 assistants by Q3-end and more than 400 Autonomous Suite agents by year-end.
SAP SE (SAP - Free Report) is expanding its AI capabilities as it works to support growth in its cloud business. In the second quarter of 2026, SAP’s cloud revenue increased 24% to €6.3 billion, supported by solid execution of on-premises-to-cloud ERP migrations across its installed base. Total revenue rose 11% to €9.9 billion. Current cloud backlog also grew 26% to nearly €23 billion, providing a forward-looking indicator of continued demand for SAP’s cloud offerings. AI and SAP Business Data Cloud were embedded as key pillars in more than 90% of SAP’s 50 largest deals, giving the company confidence for the second half of the year.
SAP’s new Business AI platform is built around three pillars: build, context and reason, and run and govern. Through Joule Studio, customers and developers can create and extend agents while accessing multiple leading large language models. SAP Business Data Cloud provides agents with broad data access, while Dremio enables SAP and non-SAP data to be analyzed together in real time without first moving or copying it. Reltio supports end-to-end governance of master data, while Prior Labs enables agents to generate tabular predictions. The platform also includes governance capabilities designed to address compliance, data privacy, authorization and sovereignty requirements.
SAP is also expanding its AI platform through Joule Work, which provides a single interface across its portfolio for users to collaborate with AI agents. Following Sapphire, beta programs for the new platform, Suite and Joule Work were immediately oversubscribed, with SAP reporting strong initial customer feedback and confidence in a successful third-quarter launch. The company plans to release nearly 50 assistants by the end of the third quarter and more than 400 Autonomous Suite agents by year-end.
The AI strategy is also supporting ERP modernization. SAP’s new RISE and GROW with SAP offerings have seen strong uptake of its AI ERP migration toolchain, with customers achieving faster time to value and up to 30% lower ERP migration costs. On the last earnings call, management stated that customers are recognizing the need to modernize their ERP landscapes while implementing and adopting AI, supporting both cloud migration and AI adoption.
SAP also expects AI to create additional commercial opportunities over time. The company plans to monetize AI agents based on their value, while outcome-based pricing could provide a new approach to pricing AI solutions. Management expects this approach to support an acceleration in AI cloud revenue over the next 12 months, alongside healthy gross margins.
For 2026, management expects cloud revenue between €25.8 billion and €26.2 billion, cloud and software revenue of €36.3–€36.8 billion and approximately €10 billion in free cash flow.
Taking a Look at SAP’s Competitors
Salesforce, Inc. (CRM - Free Report) is extending its CRM franchise through Agentforce, Data 360 and an interface strategy that brings its data and workflows into more AI surfaces. Recurring revenues and backlog remain healthy, while rising agent usage, premium bundle bookings and Slack activity support management’s expectation for organic revenue reacceleration. Salesforce raised its fiscal 2027 revenue guidance to $46.10-$46.40 billion from $45.90-$46.20 billion. The $200 million increase, or $300 million in constant currency, reflects $100 million of organic growth and $200 million tied to the pending Contentful and Fin acquisitions. For the third quarter of fiscal 2027, CRM expects revenues of $11.42-$11.50 billion, implying 11-12% year-over-year growth.
Workday, Inc. (WDAY - Free Report) is benefiting from a recurring subscription model supported by steady demand for core HCM and financial management, high customer retention and a growing base of enterprise relationships. AI adoption, agentic products and platform expansion can drive customer spending and long-term growth. Management's current fiscal 2028 target calls for subscription revenue growth of about 11%, consistent with the expected second-half fiscal 2027 growth rate. Potential upside could come from Sana Enterprise, Workday Extend with Data Cloud and AI agents, all of which management said are seeing strong early demand.
SAP’s Price Performance, Valuation & Estimates
Shares of SAP have gained 26.7% in the past six months, underperforming the Zacks Computer and Technology sector’s appreciation of 33.8%.
Image Source: Zacks Investment Research
From a valuation standpoint, SAP stock is currently trading at a trailing 12-month Price/Earnings ratio of 27.48X, which is higher than the Zacks Computer - Software industry average of 26.97X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for SAP’s 2026 earnings is pegged at $8.16, which suggests 17.24% growth over the figure reported in 2025.
View the Zacks #1 Rank List
Image: Bigstock
How Will SAP's AI Platform Support Cloud Revenue Growth?
Key Takeaways
SAP SE (SAP - Free Report) is expanding its AI capabilities as it works to support growth in its cloud business. In the second quarter of 2026, SAP’s cloud revenue increased 24% to €6.3 billion, supported by solid execution of on-premises-to-cloud ERP migrations across its installed base. Total revenue rose 11% to €9.9 billion. Current cloud backlog also grew 26% to nearly €23 billion, providing a forward-looking indicator of continued demand for SAP’s cloud offerings. AI and SAP Business Data Cloud were embedded as key pillars in more than 90% of SAP’s 50 largest deals, giving the company confidence for the second half of the year.
SAP’s new Business AI platform is built around three pillars: build, context and reason, and run and govern. Through Joule Studio, customers and developers can create and extend agents while accessing multiple leading large language models. SAP Business Data Cloud provides agents with broad data access, while Dremio enables SAP and non-SAP data to be analyzed together in real time without first moving or copying it. Reltio supports end-to-end governance of master data, while Prior Labs enables agents to generate tabular predictions. The platform also includes governance capabilities designed to address compliance, data privacy, authorization and sovereignty requirements.
SAP is also expanding its AI platform through Joule Work, which provides a single interface across its portfolio for users to collaborate with AI agents. Following Sapphire, beta programs for the new platform, Suite and Joule Work were immediately oversubscribed, with SAP reporting strong initial customer feedback and confidence in a successful third-quarter launch. The company plans to release nearly 50 assistants by the end of the third quarter and more than 400 Autonomous Suite agents by year-end.
The AI strategy is also supporting ERP modernization. SAP’s new RISE and GROW with SAP offerings have seen strong uptake of its AI ERP migration toolchain, with customers achieving faster time to value and up to 30% lower ERP migration costs. On the last earnings call, management stated that customers are recognizing the need to modernize their ERP landscapes while implementing and adopting AI, supporting both cloud migration and AI adoption.
SAP also expects AI to create additional commercial opportunities over time. The company plans to monetize AI agents based on their value, while outcome-based pricing could provide a new approach to pricing AI solutions. Management expects this approach to support an acceleration in AI cloud revenue over the next 12 months, alongside healthy gross margins.
For 2026, management expects cloud revenue between €25.8 billion and €26.2 billion, cloud and software revenue of €36.3–€36.8 billion and approximately €10 billion in free cash flow.
Taking a Look at SAP’s Competitors
Salesforce, Inc. (CRM - Free Report) is extending its CRM franchise through Agentforce, Data 360 and an interface strategy that brings its data and workflows into more AI surfaces. Recurring revenues and backlog remain healthy, while rising agent usage, premium bundle bookings and Slack activity support management’s expectation for organic revenue reacceleration. Salesforce raised its fiscal 2027 revenue guidance to $46.10-$46.40 billion from $45.90-$46.20 billion. The $200 million increase, or $300 million in constant currency, reflects $100 million of organic growth and $200 million tied to the pending Contentful and Fin acquisitions. For the third quarter of fiscal 2027, CRM expects revenues of $11.42-$11.50 billion, implying 11-12% year-over-year growth.
Workday, Inc. (WDAY - Free Report) is benefiting from a recurring subscription model supported by steady demand for core HCM and financial management, high customer retention and a growing base of enterprise relationships. AI adoption, agentic products and platform expansion can drive customer spending and long-term growth. Management's current fiscal 2028 target calls for subscription revenue growth of about 11%, consistent with the expected second-half fiscal 2027 growth rate. Potential upside could come from Sana Enterprise, Workday Extend with Data Cloud and AI agents, all of which management said are seeing strong early demand.
SAP’s Price Performance, Valuation & Estimates
Shares of SAP have gained 26.7% in the past six months, underperforming the Zacks Computer and Technology sector’s appreciation of 33.8%.
Image Source: Zacks Investment Research
From a valuation standpoint, SAP stock is currently trading at a trailing 12-month Price/Earnings ratio of 27.48X, which is higher than the Zacks Computer - Software industry average of 26.97X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for SAP’s 2026 earnings is pegged at $8.16, which suggests 17.24% growth over the figure reported in 2025.
SAP currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.