Tech company is now the most valuable European entity with stock surging over 40% in the past year.
SAP SE, a European software multinational company, headquartered in Walldorf, Germany, surpassed Novo Nordisk, the danish drug maker, to become Europe’s most valuable company, with a market value of nearly €313.70 billion ($339.47 billion). SAP shares rose 1.4 per cent on Monday, lifting its market capitalisation to €313bn, just above that of Novo Nordisk, whose shares dipped 1.3 per cent. In the fourth quarter of 2024, SAP reported robust financial results, with group revenue increasing by 10% year-over-year on a constant currency basis. This growth was driven by strong performance in its cloud and software segments, with the cloud backlog showing a significant 29% year-over-year increase. The company’s stellar growth is partly attributed to its strategy of shifting from software license sales to subscription-based cloud services, offering more predictable and profitable recurring revenue.
SAP SE, founded in 1972 by former IBM employees Dietmar Hopp, Hasso Plattner, Klaus Tschira, Hans-Werner Hector, and Claus Wellenreuther, has grown from a small German startup into a global leader in enterprise software solutions. In April 1972, the five founders established SAP—originally named Systemanalyse Programmentwicklung (System Analysis Program Development)—in Weinheim, Germany. Their goal was to develop standard application software for real-time data processing, a novel concept at the time. By 1973, SAP introduced its first financial accounting system, known as SAP R/1, which laid the foundation for future integrated business solutions.
The 1980s marked significant growth for SAP. The company transitioned to SAP GmbH in 1981 and relocated its headquarters to Walldorf, Germany. During this period, SAP developed SAP R/2, a mainframe-based enterprise resource planning (ERP) system that integrated various business processes. This innovation attracted a growing customer base, including notable clients like Dow Chemicals, which became SAP’s 1,000th customer.
In 1992, SAP launched SAP R/3, transitioning from mainframe computing to a client-server architecture. This shift allowed for more scalable and flexible business solutions, facilitating SAP’s expansion into international markets. By the late 1990s, SAP had established itself as a leading provider of ERP solutions globally, with a presence in numerous countries and a diverse clientele.
Entering the 21st century, SAP adapted to the digital economy by expanding its product portfolio to include solutions for customer relationship management (CRM), supply chain management (SCM), and business intelligence (BI). The company recognised the growing importance of cloud computing and, through strategic acquisitions such as Ariba, Fieldglass, and Concur between 2012 and 2014, positioned itself as a significant player in the cloud services market.
In early 2024, SAP initiated a comprehensive restructuring plan to focus on AI and other strategic growth areas. This program aimed to transform the company’s operational setup to capture AI-driven efficiencies and prepare for scalable future revenue growth. Initially projected to impact around 8,000 positions, the restructuring was later expanded to affect between 9,000 and 10,000 employees. Despite these changes, SAP anticipated maintaining a stable headcount by the end of 2024 through reinvestment in strategic areas, particularly Business AI.
CEO Christian Klein underscored the importance of AI in SAP’s strategy, noting that Business AI played a crucial role in securing deals during the second quarter of 2024. Approximately 20% of all deals included premium AI use cases, highlighting the growing demand for AI-integrated solutions.
SAP’s focus on AI and cloud computing has translated into robust financial performance. In the second quarter of 2024, the company reported a 25% year-over-year increase in cloud revenue, reaching €4.15 billion. The current cloud backlog also grew by 28%, indicating strong future demand. Total revenue for the quarter was €8.29 billion, a 10% increase from the previous year.
The third quarter of 2024 continued this positive trend, with cloud revenue increasing by 25% to €4.35 billion. The cloud backlog, representing sales to be booked in the next 12 months, also grew by 25% to €15.4 billion. These figures underscore SAP’s successful transition to cloud-based solutions and the effective integration of AI into its offerings.
By the end of 2024, SAP’s strategic focus on AI and cloud computing had significantly enhanced its market position. The company’s share price rose by 51% over the year, reflecting investor confidence in its direction. SAP’s cloud and software revenue reached €29.83 billion, an 11% increase from the previous year, with cloud revenue alone accounting for €17.14 billion, up 25%.
Christian Klein highlighted the company’s transformation, stating that SAP had more than doubled its cloud revenue since 2020, with cloud revenue comprising half of the total revenue by the end of 2024. He underlined that no major competitor was growing as fast as SAP, attributing this success to the company’s strategic focus on AI and cloud solutions. SAP’s proactive approach to integrating AI into its product portfolio, coupled with a comprehensive restructuring plan, has positioned the company favourably in the competitive enterprise software market. Based in the town of Walldorf in south-west Germany, SAP now makes up a bigger proportion of the German index than the country’s historic car sector, which includes Volkswagen and Mercedes-Benz. SAP’s weighting in the Dax has repeatedly breached a 15 per cent cap, prompting Deutsche Börse to introduce a new uncapped version of the index last month.
Moreover, SAP is a cornerstone of the IT cluster in the Rhine-Main-Neckar region, often referred to as Germany’s Silicon Valley. This cluster is known as the largest IT hub in Europe, generating 50% of the total revenue of the continent’s top 100 software companies.
SAP’s prominence extends beyond economics into the geopolitical realm. The company’s leadership has actively engaged in discussions on European policies, particularly concerning technology regulation. In September 2024, CEO Christian Klein cautioned against over-regulating artificial intelligence, highlighting that excessive constraints could hinder Europe’s competitiveness, especially in comparison to the United States. Furthermore, SAP has taken a public stance on socio-political issues. In January 2025, CFO Dominik Asam expressed concerns about the rise of far-right movements in Europe, advocating for the values of an open society.
The German tech company’s initiatives extend into the realm of digital sovereignty, addressing Europe’s increasing emphasis on data security and autonomy. In February 2025, SAP announced its Sovereign Cloud service, tailored to meet the stringent security and compliance requirements of government and defense sectors. This service underscores SAP’s commitment to supporting national security priorities and enhancing Europe’s digital independence.
At the Munich Security Conference in February 2025, SAP voiced the importance of establishing a sovereign cloud infrastructure for Europe. Thomas Saueressig, an SAP board member, highlighted that securing digital assets is as vital as traditional national defense, given the increasing frequency of cyberattacks.
The U.S.-China rivalry in AI and technology has prompted Europe to reassess its position in the global tech arena. The U.S. has implemented measures to limit China’s access to American technology, which has implications for European companies operating internationally. SAP’s proactive approach in AI and digital sovereignty positions it as a key player in strengthening Europe’s technological autonomy amid these geopolitical tensions. Although, the largest European company is only a fraction of the “magnificent seven” giants of the United States. The German company’s 2 billion euros a year investment into AI is effortlessly eclipsed by the spending splurge in hundreds of billions of dollars by their counterparts in the US.
SAP boss Klein made no bones of the upcoming contention on AI and critical tech between Europe and its trans-atlantic partner, the United States – not to forget China. Klein said, as reported by FT, “If we over-regulate using data for developing new AI in Europe, but [in the US] it is still OK, then you’re at a massive disadvantage.”
Klein’s intervention came as the enterprise software sector was being upended. Rivals such as Salesforce and Oracle raced to infuse generative AI through their services via chatbots or agents that can understand and act on natural language queries and commands. But tech companies have bridled at restrictions in the EU’s new Artificial Intelligence Act, which seeks to regulate the most powerful large language models, and the Digital Markets Act and data protection rules, which restricts what data can be used to train LLMs. Meta and Apple have declined to launch some AI products from the region as a result.
SAP SE has firmly established itself as Europe’s leading technology company, with a market capitalisation surpassing €313 billion and a strong foothold in enterprise software, cloud computing, and artificial intelligence. As Europe grapples with intensifying geopolitical challenges—including U.S.-China tech rivalry, regulatory concerns, and the need for digital sovereignty—SAP stands at the forefront of these transformations. Its strategic pivot towards AI and cloud services, coupled with its advocacy for balanced regulation, underscores its role as a crucial player in ensuring Europe’s technological competitiveness. Additionally, SAP’s commitment to sustainability and digital security aligns with the European Union’s long-term economic and policy objectives. While European tech firms have historically struggled to match their American and Chinese counterparts, SAP’s current trajectory suggests that it could emerge as a defining force in shaping Europe’s technological future. Whether it can fully assume this role, however, will depend on its ability to sustain innovation, navigate regulatory landscapes, and capitalise on the growing demand for AI-driven enterprise solutions.