I recently added specifically SaaS stocks to my portfolio; just for clarification: I‘m a longterm investor only, so I will continue to hold my positions for example in Defence (e.g. Rheinmetall) or Tech (e.g. Alphabet), Semiconductors (e.g. Micron). The current valuation level makes entering or adding to SaaS stocks attractive for me. But ofc this is just my personal opinion -> no investment advice
I’m heavily invested in ServiceNow and Microsoft now, but the more I look into SAP, the more I think the market still underestimates how attractive the setup is here.
SAP is no longer just a legacy ERP company. Cloud revenue is expected to reach roughly €26B in 2026, operating profit is growing double digit again, free cash flow keeps improving and the business increasingly shifts toward recurring revenue.
At the same time, SAP arguably has one of the strongest moats in enterprise software globally. The company sits directly inside mission critical workflows like ERP, finance, procurement, HR and supply chains. Once integrated, switching costs are massive. In an AI world, owning the structured enterprise data layer may actually become more valuable than the models themselves.
SAP recently issued €3.5B in bonds to accelerate its AI and data strategy while simultaneously running a buyback program of up to €10B through 2027, one of the largest in German market history.
The recent acquisitions also look far more strategic than people realize:
Reltio for master data management, Dremio for open enterprise data integration and Prior Labs for frontier AI models focused on structured business data.
To me, that’s SAP building an enterprise AI operating layer around its existing moat.
What’s interesting is that despite all this, SAP still trades very differently from premium US SaaS names psychologically; stock price is still lagging behind. ServiceNow already received the “elite compounder” rerating from the market. SAP feels earlier in that perception shift even though the fundamentals are increasingly moving in the same direction.
I also like SAP as a Europe hedge. With digital sovereignty becoming a bigger topic across Europe, SAP is probably one of the clearest beneficiaries at scale.