SAP gains after JPMorgan upgrades stock as ’AI moves from pilot to production’

 JPMorgan upgraded SAP to Overweight from Neutral and raised its price target to €275 for December 2028 from €175 for December 2027, saying the shift of enterprise AI from pilots to production favors incumbent systems of record.

Analyst Toby Ogg said that as AI projects move into production with agents, "scale and return on investment (ROI) depend on much more than the model, namely context, control and cost." 

SAP shares rose 2.1% in early German trading.

Prototyping agents is relatively simple, but production depends on data quality, process context and integration, which SAP supplies through its Business Data Cloud, Business Technology Platform, Signavio and Knowledge Graph, increasingly for non-SAP data too, Ogg noted.

Control-wise, the analyst pointed to July’s Hugging Face breach, carried out end-to-end by autonomous agents, as a sign of the risk agents can pose. SAP’s Joule assistant runs within customers’ existing permissions and audit trails, and the company commits not to use customer data to train external large language models.

Cost is the third factor. IDC found that 67% of organizations with AI agents in production have exceeded their budgets, and Gartner expects agent costs to rise fivefold by 2028 even as token prices fall. "SAP can over time price AI on completed tasks, help route tasks to the most cost-effective model, and leverage business context for performance and cost advantages," Ogg said. 

He also said SAP’s own AI offering is improving, citing internal investment in Joule agents, industry-wide model improvements and a string of bolt-on acquisitions, including WalkMe, LeanIX, SmartRecruiters, Reltio and Dremio. JPMorgan’s customer and partner checks point to early traction.

There are early signs in the numbers, the analyst said. SAP’s current cloud backlog has surprised to the upside for three quarters, and third-quarter growth of 26% implied a step up in absolute organic additions from a year earlier, "bucking the numerical 2nd derivative trend to the upside," Ogg wrote. 

He is also more confident margins will hold up in the near term, helped by internal AI efficiencies and scope for further workforce changes. JPMorgan raised its 2026 to 2028 non-IFRS EBIT and earnings per share estimates by low-to-mid single digits, mainly on greater margin expansion. Its 2027 EPS estimate rose to €8.38 from €8.20.

While SAP has recovered from its July lows and is "no longer priced for AI disruption," Ogg said the earnings growth algorithm alone supports attractive returns, with a roughly 17% annual non-IFRS EPS growth rate through 2028. The target assumes about 24 times forward earnings.