SAP shares rise as BofA's CIOs survey supports bullish thesis

Investing.com -- SAP SE shares are up around 1% Wednesday after Bank of America reiterated its bullish stance, supported by insights from its annual CIO survey. 

The survey, which polled 300 CIOs across Europe and the US, highlighted increasing IT budgets and improving perceptions of SAP's positioning relative to competitors like Oracle (NYSE:ORCL ), Workday (NASDAQ:WDAY ), and Salesforce (NYSE:CRM ).

BofA reaffirmed its Buy rating on SAP, citing it as one of its "25 stocks for 2025" and a top large-cap software pick. 

The analysts noted, "IT budgets are expected to increase 4.9% for 2025, versus 3.8% in 2024," indicating robust spending intentions. The bank adds that SAP’s improved perception against its competitors bolsters its market position.

The survey also underscored SAP’s ongoing cloud transition. 

"S/4HANA is seen by most respondents as a value add," with a significant shift toward cloud adoption expected. 

BofA said that currently, 17% of respondents have over 40% of their workloads in the cloud, with this figure expected to rise to 49% within three years. 

Additionally, SAP’s RISE offering is said to be recognized for its impact on accelerating cloud migrations, with 45% of respondents anticipating it will speed up their transitions by six to twelve months.

While AI adoption remains in its early stages, BofA says SAP’s innovation pipeline is well-received. However, the business case for AI is still developing, with only 27% of respondents expressing a willingness to invest in specific AI use cases, according to the bank. 

Core ERP is identified as the area where AI can add the most value, followed by CRM and expense management.

BofA raised its price objective for SAP to €291 from €283, reflecting a stronger USD and favorable market conditions. 

"We expect approximately 25% earnings growth coupled with stable multiples to drive further share price upside," BofA concluded.

Source: Investing.com