The latest CES highlighted the rapid advancements in AI, but the real challenge for businesses lies in integrating AI into existing systems and delivering measurable ROI. 

SAP SE (SAP) has positioned itself as a leader in embedding AI into enterprise resource planning (ERP) solutions, such as its cloud-based S/4HANA system, which manages finances, HR, and supply chains. 

By incorporating AI tools like Joule to automate tasks and enhance efficiency, SAP is driving cloud ERP migrations and gaining momentum, with cloud revenue projected to grow significantly by 2027. 

Despite challenges from legacy systems and competitors, SAP’s tailored solutions for industries give it a competitive edge, making it a stealth leader in enterprise AI adoption.

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The latest Consumer Electronics Show (CES) once again demonstrated how rapidly the tech industry is pushing the boundaries of AI and advanced computing.

Companies introduced new processors and AI tools designed to change how businesses and consumers use technology.

However, there is an under-the-radar issue with this AI mania. Businesses aren’t struggling to access AI; they’re struggling to use it.

For every company racing to adopt AI, there’s a gap between promise and practice. New chips and models mean little if they can’t integrate with legacy systems, navigate complex regulations, or deliver measurable ROI.

The real question isn’t “What can AI do?” but “How do we make it work here?”

This is where SAP SE (SAP) has quietly positioned itself…

While much of the AI spotlight focuses on consumer tech, SAP’s strength lies in integrating AI into the unglamorous backbone of business: Enterprise resource planning (ERP).

ERPs have traditionally been slow to migrate to the cloud, largely due to the complexity and scale of these systems.

However, AI has emerged as a catalyst, encouraging businesses to upgrade to modern, cloud-based ERP solutions.

SAP is capitalizing on this trend, embedding AI into its cloud offerings to deliver tangible value to customers.

Its cloud-based ERP systems, like S/4HANA, act as central hubs for managing finances, HR, and supply chains.

Now, generative AI tools such as Joule, SAP’s copilot, are being layered into these systems to automate tasks like invoice processing, inventory optimization, and compliance checks.

Additionally, a recent TD Cowen survey ranked ERP as the third-highest priority for SaaS spending in 2025, up four spots from earlier rankings and the largest jump of any category.

We can attribute this to AI’s role in accelerating cloud ERP migrations, which had previously lagged.

SAP recently reported stronger performance and a healthier growth outlook, with mid-market demand projected to rise 7% in 2025, up from 2% a year ago.

Furthermore, SAP isn’t selling standalone AI products; it’s embedding tools into workflows that companies already use.

For example, its AI agents analyze supply chain data to preempt disruptions, while real-time analytics help teams make faster decisions.

This approach reduces friction, making AI adoption less about “transformation” and more about incremental gains in efficiency.

This strategy already started to pay out. SAP’s cloud revenue has climbed from lower single-digits in 2020-2022 to 9-10% in 2023-2024, with the company forecasting acceleration to 15% by 2027.

Yet challenges remain. Legacy systems still dominate many large enterprises, and migration to the cloud requires time and resources.

Competitors like Microsoft (MSFT) and Oracle (ORCL) are pushing their own AI-driven ERP solutions.

And these concerns are reflected by SAP’s low 16.6 Uniform P/E ratio…

But SAP’s deep industry expertise, and tailoring tools for sectors like manufacturing, retail, and healthcare give it an edge in delivering actionable insights rather than generic fixes.

The company may not dominate AI headlines like some of its tech peers, but its strategic approach to embedding AI into enterprise solutions makes it a stealth AI play.

As AI adoption continues to grow, SAP’s quiet leadership in this space is likely to become more apparent, making it an integral part of the AI narrative in the enterprise software market.

Best regards,

Joel Litman & Rob Spivey
Chief Investment Officer &
Director of Research 
at Valens Research