SAP AI Channel Survey: Adoption Remains Early, but Spending and S/4HANA Migration Momentum Is Strengthening

Overview

This report is based on Morgan Stanley AlphaWise's AI-focused survey of SAP Gold and Platinum resellers, covering SAP Business AI/Joule, S/4HANA migration tools, Business Data Cloud, and customer perceptions of SAP's AI strategy. The report finds that SAP AI adoption and BDC deployment remain at an early stage, but channel feedback is broadly supportive of SAP's AI narrative and provides support for future cloud migration and incremental spending.

Core views

The core view is that SAP's AI opportunity is more likely in the near term to accelerate S/4HANA conversion and increase customer spending than to immediately generate large-scale standalone AI revenue. 33% of resellers observed paid adoption, 87% expect AI to drive incremental SAP spending, and 80% expect AI migration tools to increase willingness to migrate to S/4HANA. At the same time, SAP's AI strategy is considered credible but insufficiently differentiated; competition, innovation speed, and customers' willingness to pay extra for AI remain key uncertainties.

Analysis framework

The research uses primary AlphaWise channel research, combined with systems integrator feedback and information from the company's 2Q26 earnings call. The survey was conducted from July 1 to 6, 2026, comprising 30 completed online interviews, including 15 in the United States and 15 in Europe, covering SAP Gold and Platinum Partners in the United Kingdom, Germany, and France. The report also incorporates financial forecasts, a 10-year DCF valuation framework, and peer/market sentiment assessments.

Methodology notes

• Primary ResearchAlphaWise Reseller AI Survey

  Measuring customer AI adoption, spending expectations, and migration willingness from the reseller perspective

  Through interviews with a fixed sample of resellers, the study tracks SAP customers' adoption of Business AI/Joule, S/4HANA migration tools, and BDC, while observing differences between the United States and Europe.

• Valuation methods10-Year DCF

  Discounted cash flow valuation

  The report values SAP using a 10-year DCF, assuming a WACC of approximately 10% and a terminal growth rate of 2.5%, while maintaining a €190 per share target price.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• SAP SE (SAPG.DE)

  Core covered security, European-listed ordinary shares

  Strengths

  Support comes from the S/4HANA migration cycle, the strategic position of core-system data, embedded AI through Business AI/Joule, BDC commercial momentum, and reseller spending expectations.

  Weaknesses

  AI adoption remains at an early stage, customers have limited perception of strategic differentiation, and actual BDC deployment is still developing.

  Comparison

  Resellers consider SAP's AI strategy broadly credible, but not yet clearly differentiated from enterprise software peers; customers show only a slight preference for SAP-native AI.

  Risks

  Competitive substitution, AI commoditization, slower innovation, price sensitivity, systems integrator capacity constraints, and weaker macroeconomic demand.

• SAP SE ADR (SAP.US / SAP.N)

  U.S.-traded security mapping for the same company

  Strengths

  Has exposure to the same fundamentals and AI/S/4HANA conversion logic as SAPG.DE.

  Weaknesses

  The report's primary price, target price, and valuation references are based on SAPG.DE's euro-denominated share price.

  Comparison

  The ADR represents securities of the same company; the investment conclusion should be understood in the context of exchange-rate and trading-market differences.

  Risks

  In addition to company-specific fundamental risks, exchange-rate and ADR market-liquidity differences also apply.

Key data

• Report RatingOverweightMorgan Stanley maintains its rating on SAP SE.
• Target Price€190.00The target price implies approximately 21.9% upside relative to the July 30 closing price of €155.92.
• Business AI/Joule Paid Adoption33%Of this, 23% represents isolated or point use cases and 10% represents broad deployments; 53% remain in the evaluation, pilot, or proof-of-concept stage.
• Expected AI-Driven SAP Spending87%27% expect a significant increase and 60% expect a moderate increase.
• AI Migration Tools Driving S/4HANA Willingness80%10% expect a significant increase and 70% expect a moderate increase, for a net figure of approximately +73%.
• Credibility of SAP's AI Strategy53%10% consider it highly credible and differentiated, while 43% consider it credible but insufficiently differentiated.
• SAP as a Net Beneficiary of AI63%Down from 77% in 1Q26, but still nearly 3x the proportion viewing SAP as a net loser.
• Business Data Cloud Purchase RateApproximately 29%Down from approximately 38% in 1Q26 and approximately 36% in 4Q25, indicating that adoption remains at an early stage.
• Valuation MultiplesApproximately 22x FY26 adj. P/E, approximately 1.1x PEGBased on the report's discussion of a share price near €156.

Impact & implications

The survey results are modestly positive for SAP shares: in the near term, AI can support S/4HANA conversion and cloud backlog realization by reducing migration costs, improving implementation efficiency, and strengthening customers' rationale for upgrades; over the medium term, broader adoption of BDC and Business AI/Joule could generate more explicit incremental monetization. The negative implication is that current production deployment remains limited and differentiation still needs to be demonstrated. If competitors capture AI budgets or customers demand that AI functionality be bundled at no additional cost, SAP's pricing and growth leverage could come under pressure.

Risks

• Competition or competitive substitution is the most frequently cited AI risk, including more advanced hyperscalers or third-party AI solutions and new entrants lowering barriers to entry.
• AI agents could abstract away SAP's front-end interfaces, commoditizing SAP as a data or infrastructure layer and weakening the value of the application layer.
• Some resellers believe SAP's pace of innovation is slow; European feedback in particular suggests that there is extensive communication but insufficient proof points.
• Customers may build AI capabilities in-house or shift to external tools, reducing dependence on SAP-native AI.
• Customers may expect AI functionality to be embedded directly without additional charges, and rising price sensitivity could limit monetization.
• BDC adoption and deployment remain at an early stage; if adoption falls short of expectations, realization of AI upside could be delayed.
• A weak macroeconomic environment, cloud subscription growth below expectations, or systems integrator capacity constraints could slow S/4HANA adoption.

What to watch

• The pace at which Business AI/Joule converts from pilots to paid broad deployments.
• Whether AI actually drives incremental spending by SAP customers over the next 12 months.
• Whether AI migration tools continue to reduce S/4HANA migration costs and shorten project timelines.
• Business Data Cloud purchase rates, go-live deployments, and the monetization path for 2027/2028.
• Whether customers view SAP's AI strategy as more differentiated than those of Salesforce, ServiceNow, Atlassian, Microsoft, and Oracle.
• Changes in customer preference for SAP-native AI versus third-party AI tools, particularly differences between the United States and Europe.
• Whether the proportion of resellers viewing SAP as a net beneficiary of AI recovers from 63% in 2Q26.
• Whether FY26 adjusted P/E of approximately 22x and PEG of approximately 1.1x can continue to be supported by growth visibility and AI monetization.