Bank of America Reaffirms Confidence in SAP's Strategic Direction

Bank of America reiterates buy on SAP despite share price lows, citing Reltio acquisition for AI data foundation and strong fundamentals like record cloud backlog.

Despite a challenging period for its share price, SAP has received a renewed vote of confidence from analysts at Bank of America. The firm reiterated its buy recommendation on Friday, March 27th, following a week that saw the stock touch a new 52-week low of €142.34. The analysts pointed to the company's recently announced acquisition of U.S.-based specialist Reltio Inc. as a key catalyst for their optimistic stance.

Strategic Acquisition Targets Data Foundation for AI

The planned purchase of Reltio, a provider of master data management (MDM) solutions, is seen as a direct move to strengthen the core infrastructure required for artificial intelligence. The central thesis is that AI initiatives are only as reliable as the data they are built upon. By acquiring technology to cleanse and unify enterprise data—whether from SAP's own systems or external sources—SAP aims to position itself as the essential data backbone, thereby addressing a common point of failure for AI projects.

Bank of America interprets this acquisition as a logical extension of SAP's platform strategy. At a time when market participants question the relevance of traditional enterprise software in the AI era, SAP is doubling down on becoming an indispensable part of the data stack.

Expanding Sovereign Cloud Offerings

In a separate but related development, SAP announced the launch of a sovereign cloud solution for the French market, developed in partnership with "Bleu." This offering is tailored for public sector institutions and heavily regulated industries that operate under stringent data residency and privacy mandates. Following the EU AI Cloud initiative, this represents another step in leveraging European regulatory frameworks as a competitive advantage.

Strong Fundamentals Contrast with Share Price Weakness

The strategic moves come against a backdrop of significant pressure on SAP's equity. Since the start of the year, the stock has shed nearly 30% of its value, trading well below its 200-day moving average of €212.43. Broader concerns about economic conditions, geopolitical tensions, and valuation have weighed heavily on the share price.

However, the company's fundamental metrics present a more resilient picture. SAP has increased its dividend for 2025 to €2.50 per share. Furthermore, its cloud backlog reached record levels by the end of 2025, and recurring revenue now constitutes more than 80% of total income. Whether these strengths can halt the current downturn will largely depend on how quickly the market begins to price in SAP's AI strategy as a genuine growth driver, rather than viewing it as a potential risk.