Sapphire

2024

Wednesday

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<p class="has-drop-cap">SAP’s (NYSE: SAP) Germany-listed shares touched a new record high on Wednesday after the software maker said it <a aria-label="plans a major job restructuring (opens in a new tab)" href="https://www.reuters.com/technology/sap-announces-company-wide-restructuring-updates-2025-outlook-2024-01-23/" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">planned a significant job restructuring</a> to fuel growth in its AI-oriented business areas and offered a strong outlook for cloud revenue growth this year. The firm’s NYSE-listed shares rose over 5% in premarket trading at the time of writing.</p> 
<h3 id="sap-to-restructure-8-000-jobs-and-pivot-towards-ai">SAP to Restructure 8,000 Jobs and Pivot Towards AI</h3> 
<p>Shares of SAP SE jumped to an all-time high in Frankfurt trading on Wednesday after the enterprise software maker issued an optimistic outlook for cloud revenue growth and announced a major AI-focused job restructuring plan.</p> 
<p>Specifically, SAP intends to restructure 8,000 job roles to drive growth in artificial intelligence (AI)-driven business sectors. Allocating 2 billion euros ($2.2 billion) to the initiative, the company intends to provide AI training for employees or replace them through voluntary redundancy programs.</p> 
<p>The company envisions a fundamental transformation in its business with <a href="https://tokenist.com/meta-to-launch-generative-ai-for-creating-ads-this-year-report/" rel="dofollow" class="deco-link">generative AI</a> and has <a aria-label="committed (opens in a new tab)" href="https://sapphireventures.com/press/sapphire-ventures-commits-1b-to-invest-in-the-next-generation-of-ai-powered-enterprise-technology-startups/" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">committed</a> to investing over $1 billion in supporting <a href="https://tokenist.com/three-big-ai-stocks-to-consider-other-than-nvidia-nvda/" rel="dofollow" class="deco-link">AI-powered technology</a> startups through its investment arm, Sapphire Ventures.</p> 
<blockquote class="wp-block-quote"> 
 <p>“The right adjustments are being made and the company is being reorganised to prepare it for the age of artificial intelligence,” said investment strategist Jürgen Molnar at brokerage RoboMarkets.</p> <cite>– Jürgen Molnar, investment strategist at brokerage RoboMarkets.</cite>
</blockquote> 
<blockquote class="wp-block-quote"> 
 <p>“Even if some employees are likely to fall by the wayside, HR policy is less of a cost issue and more of a strategic one, in which many new opportunities are also likely to arise.”</p> 
</blockquote> 
<p>On the same day, SAP also <a aria-label="reported (opens in a new tab)" href="https://www.prnewswire.com/news-releases/sap-announces-q4-and-fy-2023-results-302042571.html" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">reported</a> its earnings and revenue for the fiscal fourth quarter and guided for the current year. Notably, the company’s fourth-quarter earnings and revenue missed expectations, but a strong outlook offset the report.</p> 
<p>The software firm anticipates double-digit growth in key cloud business revenue and overall operating profit for the current year. The 2023 cloud revenue saw a 23% growth, hitting 13.66 billion euros, aligning with consensus, and SAP projects a 24%-27% increase for 2024. Operating profit, which rose 13% to 8.7 billion euros in 2023, surpassing analyst predictions of a 9% increase, is expected to grow between 17% and 21% in 2024.</p> 
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<h3 id="sap-s-restructuring-plan-creates-upside-analysts-say">SAP’s Restructuring Plan Creates Upside, Analysts Say</h3> 
<p>SAP’s shares surged over 6% in Frankfurt, reaching a new record high of 161.54 EUR. Similarly, the company’s US-listed stock was up 5.6% in premarket trading.</p> 
<p>The stock has been on an overall uptrend over the past year, gaining more than 47%. The surge to a fresh all-time high propelled SAP’s market capitalization to 193.4 billion EUR.</p> 
<p>Jefferies analysts weighed in on SAP’s restructuring announcement, saying it “creates upside” for fiscal year (FY) 2025 targets. The move generates “a higher denominator for valuation,” however, whether it justifies a higher multiple “depends on how much future margin expansion has been pulled into FY25,” they wrote.</p> <iframe src="https://tokenist.substack.com/embed" width="100%" height="320" style="border:1px solid #EEE; background:white;" frameborder="0" scrolling="no"></iframe> 
<p><em><strong>Do you think the restructuring effort will fuel a new bull cycle in 2024 for SAP? Let us know in the comments below.</strong></em></p> 
<p><em>Disclaimer: The author does not hold or have a position in any securities discussed in the article.</em></p> 
<p>The post <a rel="nofollow" href="https://tokenist.com/sap-stock-hits-record-high-after-companys-massive-pivot-towards-ai/">SAP Stock Hits Record High After Company’s Massive Pivot Towards AI</a> appeared first on <a rel="nofollow" href="https://tokenist.com">Tokenist</a>.</p>

SAP Stock Hits Record High After Company’s Massive Pivot Towards AI

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