Strategic power move or risky wager with SAP stocks?
In the world of business software, SAP finds itself at a critical juncture, as the latest financial figures indicate an urgent need for action for SAP shareholders. This comes as the German-speaking SAP User Group (DSAG) has been sharply criticizing SAP's cloud strategy, demanding more planning security.
However, all is not doom and gloom for SAP. On September 11, the company completed the acquisition of SmartRecruiters, a move that is expected to significantly strengthen its AI capabilities, particularly in the realm of HR management. The acquisition is planned to integrate directly into SAP's Human Capital Management suite.
Leading analyst firms Jefferies and JPMorgan view this strategic move as a potential game-changer for SAP. By combining SmartRecruiters' specialized AI recruiting with its existing SuccessFactors suite, SAP stands to gain access to a booming global HR tech market. This could revitalize its business, despite current stock pressure and management challenges.
The acquisition is also expected to advance SAP's AI ambitions significantly. The AI copilot "Joule" is set to benefit from this acquisition, as the enhanced capabilities of SmartRecruiters are expected to be a boost to Joule's AI capabilities.
As for SAP's strategy, the Q3 figures, to be released on October 22, will serve as a crucial test. They will reveal whether SAP's strategy can compete with US competitors or if customer criticism is justified. The Q3 results will provide insights into whether SAP's billion-dollar transformation is paying off.
Despite recent uncertainties, both Jefferies and JPMorgan maintain their positive recommendations (Buy and Overweight, respectively) for SAP. Jefferies remains confident in SAP after direct conversations with the CFO. JPMorgan dismisses concerns about AI threats and sees SAP in a unique position to accelerate growth in the coming years.
However, it's worth noting that there is a conflict between SAP's management vision and customer needs, as observed by the market. This conflict may have contributed to the criticism SAP has been facing.
As for whether SAP shareholders should invest or sell, a free analysis from September 19 provides valuable insights. However, it's essential for investors to conduct their own due diligence before making any decisions, as the situation remains fluid.
In conclusion, the acquisition of SmartRecruiters and the upcoming Q3 figures present a crucial moment for SAP. The company's ability to navigate these challenges will determine its future success.
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