SAP boosts outlook as AI operations drive growth

In a significant development for the technology sector, SAP, the German multinational software corporation, announced an upgrade to its financial forecast for the full year. This adjustment comes amid a backdrop of impressive growth in artificial cloud computing and artificial intelligence operations. SAP has indicated that its expected operating profit for 2025 is now projected to be between 10.3 billion euros ($10.7 billion) to 10.6 billion euros, surpassing the earlier target of 10.2 billion euros. This optimistic projection is attributed to their strong performance in the cloud and software domains. During this recent announcement, it was reported that the firm's adjusted operating profit for 2024 rose by an impressive 25%, amounting to 8.15 billion euros. This figure not only reflects significant year-over-year growth but is also above the increase that was expected, indicating a robust performance relative to analyst predictions. Furthermore, SAP's core cloud and software revenue increased by 11% during the reporting period, which was again slightly better than consensus estimates. Dominik Asam, SAP's Chief Financial Officer, emphasized that the company's operations are proceeding 'very much according to plan,' with this year's successful outcomes aligning closely with the company’s 'ambition' plan established back in 2020. The emergence of competition in the artificial intelligence sphere also played a role in this favorable forecast. Recently, concerns arose regarding a Chinese startup, DeepSeek, which introduced a new AI application that sparked a broader market sell-off. However, Asam asserted that these developments should actually be viewed in a positive light for SAP. He articulated that AI has become a crucial part of SAP's operations, with the technology now accounted for half of the company's cloud order entries in the fourth quarter. CEO Christian Klein further reiterated the company's confidence in leveraging its expertise in data and Business AI to support continued growth through 2027. In the face of a highly competitive landscape, SAP remains committed to enhancing its offerings and is prepared to take advantage of technological advancements as they arise. Asam concluded by stating that the sustained relevance and reliability of technology will provide SAP with greater opportunities to enhance its AI capabilities. Should the technology continue to meet these criteria, SAP is well-positioned to capitalize on new innovations, leading to improved products for its customers and a stronger overall market position.