Wells Fargo Maintains Positive Outlook on SAP SE Ahead of 2026 Transition

Wells Fargo has upgraded its outlook on SAP SE, maintaining a 'Positive' rating ahead of the 2026 fiscal period. The firm emphasizes SAP’s increasing dominance in cloud-based enterprise software, noting that the company reported 14% year-over-year growth in cloud revenue during Q4 2025, reaching €2.8 billion. This growth was driven by continued adoption of SAP S/4HANA and SAP Business Technology Platform across Europe, North America, and Asia-Pacific markets. The bank highlights SAP’s strategic focus on industry-specific solutions as a competitive moat, particularly in manufacturing, retail, and utilities. In the same quarter, SAP’s license revenue rebounded by 6%, signaling renewed confidence in product innovation and customer retention. Additionally, the company’s operating margin improved to 27.3% in 2025, up from 25.8% the prior year, reflecting disciplined cost management and higher-margin cloud service mix. Market implications suggest that SAP’s stock could see upward pressure, with Wells Fargo assigning a 12-month price target of $215 per share, implying a 12% upside from current levels. Investors across institutional and retail segments are closely monitoring SAP’s ability to sustain cloud adoption, especially amid rising competition from Oracle and Microsoft. The firm notes that SAP’s recent expansion into AI-enhanced ERP tools may further accelerate customer migration to its cloud ecosystem. The positive outlook also reflects confidence in SAP’s capital allocation strategy, including its recent €4.5 billion share buyback program completed in Q3 2025, which returned over 11% of outstanding shares to investors. With a forward P/E ratio of 24.5x, the stock remains attractively valued relative to its growth trajectory and market peers.