Europe’s big enterprise AI hope SAP books 85% of 2026 revenue as deals boom

In the highly competitive landscape of enterprise AI, SAP emerges as a formidable contender, challenging the dominance of major U.S. companies like Microsoft and Salesforce. During an exclusive conversation with CNBC's "Europe Early Edition," SAP's CEO, Christian Klein, emphasized that the surge in AI adoption is a primary factor driving new client contracts. Klein revealed that a staggering 80 to 85% of SAP's anticipated revenue for the upcoming year is already secured, attributing this success to a robust pipeline as they approach the end of the fourth quarter. He expressed optimism about the company’s performance, stating, "After we close Q4, our customers and investors can expect positive outcomes." In its latest earnings report, SAP reported a 23% increase in cloud backlog, reaching 18.8 billion euros. Despite revenue growth of 7% to 9.08 billion euros—slightly shy of market expectations—cloud revenue soared by 22%. Klein noted that this growth stems from SAP's expanding market share in AI and data cloud services. Deutsche Bank has positioned SAP as a premier choice within the European tech and global software markets, although analysts pointed out that the company has adjusted its cloud revenue forecast to the lower end, projecting between 21.6 billion euros and 21.9 billion euros for the year. They acknowledged that while SAP is managing well amidst prolonged deal cycles, the adjusted outlook reflects challenges in closing deals. Initially, SAP's stock rose by 2% at the beginning of Thursday's trading session but later fell by 2.5%, marking a 3% decline year-to-date. The European Union's regulatory stance on AI has faced scrutiny, with some businesses advocating for deregulation to keep pace with global competitors. Klein expressed concern about whether the EU's approach is effective compared to the U.S. model, which focuses on rapid testing and refinement of AI technologies. Klein reiterated SAP's commitment to delivering real value to customers, a sentiment echoed by other firms and investors in Europe. While the U.S. and China currently lead in training large language models—critical infrastructure for AI—there is a belief that Europe can excel in applying these technologies effectively. Klein described the training of large language models as becoming a "commodity" and anticipated that businesses will increasingly prioritize AI applications, which he believes will positively influence SAP's stock in the future. Moreover, SAP has established partnerships in China, allowing it to operate within the region despite geopolitical tensions. Klein acknowledged the rapid pace of AI development in China, driven by minimal regulation and a rich talent pool, making it an important market to consider.