Sapphire '26: SAP Putting Its Next Foot Forward in AI

Research evidence excerpt

Sapphire '26: SAP Putting Its Next Foot Forward in AI

TD Cowen SAP

Global Research May 14, 2026

Financials

■SAP did not provide updated financial targets but indicated it was confident in driving

significant revenue/FCF growth and that it does not see AI as a disruptive threat, rather

an incremental growth engine. Addressing investor fears of AI disrupting seat-based

models, SAP cited that ~65% of cloud revenue is non seat-based (~55% value-based; ~10%

consumption-based including the transactional business) vs. ~35% seat-based, and by 2030

it expects >30% of cloud revs will be consumption-based. BDC (at €2b in TCV in 2025) and

Joule will be the main drivers of consumption growth.

■SAP sees AI greatly expanding its TAM, with its Business Suite TAM of $800b in 2025 set to

grow to $1.4T by 2028. Mgmt sees the total AI opportunity representing an >$5T opportunity.

SAP noted it has ~440k total customers today, including >300m end-users that engage with

apps in the Cloud and >100m end-users engaged in on-prem apps. 68% of SAP customers use

Business AI (Base and/or Premium Editions), which includes its longstanding ML predictive

technologies.

■While maintenance revs have proved fairly durable so far, SAP expects its maintenance

base to be cut in half by 2030 (vs. ~€10.5b in 2025) as ECC mainstream support ends at the

end of '27, and extended maintenance ends at the end of '30, helping to continue to fuel

strong Cloud growth as migration tailwinds build, still seeing a 2x like-for-like uplift and a

2-3x multiplier when cross-selling (i.e., BTP/BDC) at time of migration. Of note, mgmt sees 2/3

of this wind-down from ECC and 1/3 from S/4 on-prem as both are expected to see strong

conversion motions, and as more ECC customers are detouring S/4 on-prem and upgrading