Enterprise software maker SAP is IBD's Stock Of The Day as the company rebounds from a key technical support level. Some analysts consider the software maker the "steady Eddie" of Europe — a description borne out by Investor's Business Daily's "average true range" of SAP stock.
On the stock market today, SAP stock rose 1.9% to close at 301.09. In 2025, SAP stock has advanced about 9%. Shares hit an all-time high of 293.70 in mid-February.
Meanwhile, the iShares Expanded Tech Software exchange traded fund — composed of many of the major enterprise software players — also is up about 9% for 2025.
In addition to selling database software, Germany-based SAP sells business relations and customer management software. Wall Street analysts have focused on the software maker's progress in converting its on-premise customer base over to cloud computing services.
"One of the main reasons we have liked SAP is its insulation from the external noise in the software sector," KeyBanc Capital Markets analyst Jackson Ader said in a recent note to clients. "You may be tired of the analogy but we're not: When the chaos in your house is at 11, SAP is the child who quietly walks upstairs to quietly play with legos in their room. While the rest of software fights the AI capex, agent and monetization battles, alone in their room, SAP quietly converts its on premise customer base over the cloud."
CFRA Research analyst Angelo Zino said in his note to clients: "SAP is a stable ship amid uncertain tariff times for tech."
SAP Stock: Shift To Cloud
Like Oracle, SAP is moving away from software-license sales to subscription-based cloud services. Software makers typically recognize on-premises license fee revenue up front when contracts are signed. Subscription-based cloud revenue is recognized over time.
Jefferies analyst Charles Brennan also holds a buy rating.
"SAP continues to deliver on its strategy of shifting customers to the cloud and unlocking cross-selling opportunities," Brennan said in a report. "This is reflected in both the current cloud backlog of 29% and total cloud backlog of 40% growth. Importantly, the total cloud backlog provides multiyear visibility of durable growth. As growth accelerates, a focus on cost efficiency is supporting operational leverage and accelerating cash flows."
SAP stock pulled back to its 50-day moving average in mid-June. The software maker has been rebounding from that technical support level.
From a technical view, shares are extended from a buy zone after an early May breakout. Also the relative strength line of SAP stock is lagging.
Sapphire Customer Conference
Listed on the New York Stock Exchange, SAP hosted an analyst day at its Sapphire customer conference in May. At the event, it showcased new artificial intelligence tools for businesses.
For the quarter ending March 31, SAP earnings came in at 1.44 euros per share (about $1.56 as of March 31) on an adjusted basis. Also, revenue climbed 12% to 9.01 billion euros (about $9.75 billion). Analysts had estimated adjusted EPS of 1.31 euros per share on revenue of 9.06 billion euros.
Cloud computing revenue rose 27% to 4.99 billion euros vs. estimates of 5.04 billion euros.
SAP reports its own financial metric called Current Cloud Backlog, or CCB. It refers to the amount of revenue a software company expects to recognize in the future from contracts with customers. In Q1, CCB rose 28% to 18.2 billion euros, in line with views.
SAP Stock Technical Ratings
Further, SAP stock holds an IBD Composite Rating of 95 out of a best-possible 99, according to IBD Stock Checkup. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Also, SAP stock has an Accumulation/Distribution Rating of C-plus. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. Its current rating indicates more funds are buying than selling.
The rating, on an A+ to E scale, measures institutional buying and selling in a stock. A+ signifies heavy institutional buying, E means heavy selling. Think of the C grade as neutral.
Lastly, the average true range, or ATR metric available on IBD's MarketSurge charting tool offers some guidance amid market volatility. It gauges the characteristic breadth of a stock's behavior.
Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
In the current, unpredictable market, IBD generally suggests stocks with 21-day ATRs of 3% or below. SAP stock's ATR is a stellar 1.62.
Follow Reinhardt Krause on X, formerly Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
