Core Insights - SAP SE has launched an expanded cloud strategy focusing on digital sovereignty and AI-driven innovation in Europe, addressing regulatory requirements and data protection needs [1][5][10] - The SAP Sovereign Cloud offers flexible deployment options tailored to customer requirements, enabling organizations to innovate securely while maintaining control over their digital assets [2][4][10] Investment Commitment - SAP is committing €20 billion to enhance Europe's digital resilience through secure and regulation-compliant cloud solutions, particularly for the public sector and regulated industries [5][10] Cloud Infrastructure and Offerings - The SAP Cloud Infrastructure (Europe) operates within EU data centers, ensuring compliance with local regulations, while the SAP Sovereign Cloud On-Site provides infrastructure within customer-selected data centers [3][6] - Delos Cloud is specifically designed for the German public sector, facilitating digital transformation while adhering to national sovereignty requirements [4] Financial Performance - SAP's cloud backlog increased by 22% to €18.1 billion, with cloud revenues rising 24% to €5.13 billion, driven by a 30% increase in Cloud ERP Suite revenues to €4.42 billion [8][10] - The company maintains its 2025 outlook, projecting cloud revenues of €21.6–€21.9 billion, reflecting a growth rate of 26–28% at constant currency [8] Growth Strategy - SAP's growth strategy is built on four pillars: product innovation, go-to-market transformation, simplification, and talent investment, aiming for sustained growth through 2027 [9] - The SAP Business Data Cloud is emerging as a core platform, integrating enterprise data to enhance AI-driven operations [11]

Core Viewpoint - SAP is investing 20 billion euros ($23.3 billion) to expand its sovereign cloud services, reflecting Europe's demand for data localization and compliance with local regulations [1][2]. Company Summary - The investment will enhance SAP's Sovereign Cloud portfolio, providing European customers with a complete technology stack while ensuring sensitive data remains under local control [2]. - SAP's offering includes an Infrastructure-as-a-Service (IaaS) platform built on open-source technologies, hosted entirely within EU-based data centers [4]. - SAP has introduced a Germany-specific cloud, Delos Cloud, designed to comply with German regulations [4]. Industry Summary - The concept of sovereign cloud is gaining traction as European regulators enforce stricter data privacy and security laws, such as GDPR and the EU AI Act [3]. - Other cloud providers are also responding to this trend; AWS announced a new sovereign cloud for Europe, while Microsoft and Google Cloud have introduced similar offerings to ensure data remains within Europe and complies with local laws [5][6].

Core Insights - SAP SE has announced a new approach to digital sovereignty and AI innovation, expanding its SAP Sovereign Cloud portfolio to provide European customers with a comprehensive technology stack [1][2] - The initiative aims to reinforce digital sovereignty as a key element of Europe's technological resilience and strategic autonomy, ensuring compliance with local regulations while enabling innovation [1][4] Group 1: SAP Sovereign Cloud Offerings - The expanded SAP Sovereign Cloud provides customers with new deployment models that cater to specific regulatory and operational needs, allowing for secure innovation [3][5] - SAP's long-term investment of over €20 billion reflects its commitment to supporting Europe's digital autonomy through secure and compliant cloud solutions [4] - The offering allows organizations to run their SAP Business Suite in sovereign environments while benefiting from continuous innovation cycles, including SAP Business Technology Platform and embedded SAP Business AI capabilities [5][6] Group 2: Compliance and Security - SAP Sovereign Cloud ensures full-stack sovereignty across data, operational, technical, and legal dimensions, empowering customers to maintain control and meet regulatory requirements [6] - The solutions are designed to be compliant with European data protection regulations, with all data stored within the EU [8] - SAP offers Delos Cloud in Germany, a secure and sovereign cloud tailored for the public sector to meet specific sovereignty requirements [8]

Summary of Key Points from the Conference Call Industry Overview - The analysis focuses on the global equity market, particularly the performance and positioning of long-only funds across various sectors, including Semiconductors, Industrials, and Health Care [1][2][24]. Core Insights - **Equity Flow Trends**: Long-only funds globally purchased $27.2 billion in the Semiconductors sector, driven by positive sentiment towards AI, while they sold $42.3 billion in Industrials and $27.1 billion in Health Care [1]. - **Regional Activity**: Funds bought $21.0 billion in Asia Pacific excluding Japan, while selling $56.5 billion in the US [1]. - **Top Stock Movements**: In the US, NVIDIA saw a significant inflow of $16.9 billion, while Apple experienced an outflow of $11.2 billion. In Emerging Markets, TSMC gained $5.9 billion, and MercadoLibre lost $1.4 billion [2]. Crowded Stocks Analysis - **Crowded Positives**: Stocks with high ownership and positive momentum include Meta, Broadcom, Netflix, Visa, Mastercard, and Wells Fargo [3][4]. - **Crowded Negatives**: Stocks with high ownership but negative momentum include Meituan, LVMH, and Pilbara Minerals [3]. - **Under-owned Negatives**: Stocks like BHP, Targa Resources, and Lockheed Martin are under-owned but have potential upside [4]. Fund Ownership and Active Exposure - **Fund Ownership Metrics**: The report indicates that 73% of relevant funds own Stock B, highlighting the importance of fund ownership in investment decisions [28]. - **Active Exposure Analysis**: The analysis includes over 5,647 active long-only funds managing more than $29 trillion in equities, with a focus on their relative weight against benchmarks [18][19]. Performance Metrics - **Back-tested Performance**: Crowded Positive stocks have outperformed the global combined universe by 4.4% since January 2015, while Under-owned Negatives have consistently underperformed [73]. - **Equity Flow Calculation**: The report emphasizes the importance of equity flow in understanding fund behavior, with cumulative long-only equity flow for China stocks reaching $193.0 billion [27]. Methodology and Limitations - **Methodology**: The analysis combines fund ownership, active exposure, and Triple Momentum to identify investment opportunities and risks [36][63]. - **Limitations**: The report notes that the analysis does not include funds that do not declare holdings regularly or those with less than $500 million in AUM, which may skew results [72]. Conclusion - The report provides a comprehensive overview of fund flows, stock positioning, and performance metrics, highlighting significant trends in the equity market and identifying potential investment opportunities and risks across various sectors and regions.

Core Insights - SAP SE will participate in two upcoming events featuring CFO Dominik Asam, including the Goldman Sachs Communacopia + Technology Conference and the Jefferies Structural Winners Series [1][2] Group 1: Event Participation - SAP executives will hold a Fireside Chat at the Goldman Sachs Communacopia + Technology Conference on September 9, 2025, from 5:50 pm to 6:25 pm CEST [1] - A second Fireside Chat will take place at the Jefferies Structural Winners Series on September 16, 2025, from 5:00 pm to 5:45 pm CEST [2] Group 2: Company Overview - SAP is a global leader in enterprise applications and business AI, with over 50 years of experience in uniting business-critical operations across various functions such as finance, procurement, HR, supply chain, and customer experience [3]

Market Overview - The Digital Shipyard Market is projected to grow from USD 1.3 Billion in 2022 to USD 5.5 Billion by 2030, at a CAGR of 19.1% during the forecast period [1] - Integration of digital technologies such as digital twin, artificial intelligence, machine learning, IoT, and additive manufacturing enhances coordination and efficiency in shipbuilding [1] Digital Shipyard Concept - A Digital Shipyard integrates system- and/or cloud-based solutions to coordinate, monitor, and improve ship manufacturing, maintenance, and support processes [2] - It replaces outdated technology with unified planning tools and a common repository of design data that is always updated and accessible [2] Key Players - Siemens (Germany) offers a comprehensive portfolio covering all aspects of the ship lifecycle and aims to expand its product offerings in the digital shipyard market [3] - Dassault Systemes (France) provides a business platform for end-to-end continuity in shipbuilding and has acquired startups to strengthen its position as a system integrator [4] - SAP (Germany) focuses on enterprise application software and has expanded its offerings through acquisitions to optimize the shipyard work environment [5] - Accenture (Ireland) enhances digitalization practices globally and partnered with Hyundai Heavy Industries to build digital shipyards [6][7] Market Dynamics - Driver: Increasing use of Product Lifecycle Management (PLM) solutions improves collaboration, synchronization, and productivity in shipbuilding [8] - Opportunity: Augmented Reality (AR) can enhance efficiency in digital shipyards by providing immersive experiences and facilitating quality checks [9] - Challenge: The industry faces a stringent regulatory framework impacting various stakeholders including manufacturers, suppliers, and end customers [10]

Group 1 - SAP, one of the largest global software companies, has experienced a share price decline of approximately 12% from its recent highs amid a broader selloff in the software sector [1] - The investment strategy focuses on acquiring companies with strong qualitative attributes at attractive prices based on fundamentals, with a long-term holding approach [1] - The portfolio management aims to avoid underperforming stocks while maximizing exposure to high-potential winners, often resulting in a 'Hold' rating for companies with limited growth opportunities or high downside risks [1]

Core Viewpoint - The article discusses the transformative impact of AI on the software industry, suggesting that AI could act as a "force multiplier" for leading suppliers rather than being a disruptive force that undermines existing business models [2][3][4]. Group 1: AI's Role in the Software Industry - AI is seen as a potential "force multiplier" for industry leaders, similar to the transition from on-premises software to cloud computing, which led to the emergence of new leaders and the transformation of established companies like Adobe and Intuit into larger, faster-growing, and more profitable entities [2][4]. - Concerns about AI replacing traditional software have led to significant market reactions, such as SAP's stock dropping 7.1%, resulting in a loss of nearly €22 billion in market value [3]. - High expectations for AI's contribution to revenue stability and growth are anticipated as the pressure from enterprise software renewal cycles eases by 2026 [4]. Group 2: Challenges for AI-native Companies - The debate centers on whether AI-native companies can offer products that are "meaningfully better and cheaper" than existing SaaS solutions [6]. - The entry barriers for enterprise software are significantly higher than for consumer software, primarily due to the critical nature of tasks involved [11]. - AI-native companies face challenges in pricing strategies, particularly in providing value-based pricing models that could threaten traditional seat-based pricing [6][7]. Group 3: Hybrid AI Strategies - Major software companies are adopting hybrid AI model strategies, combining proprietary data-driven models with external large language models (LLMs) to enhance their offerings while maintaining competitive advantages [9]. - This strategy helps mitigate risks from AI-native competitors by locking customers into familiar and integrated ecosystems [9]. - The complexity of enterprise workflows and high data migration costs make it difficult for AI-native products to gain customer trust and adoption quickly [9]. Group 4: Future Indicators to Monitor - Key indicators to watch include the stability of Net Revenue Retention (NRR), which has faced significant pressure in recent years due to pandemic-related demand peaks [15]. - The contribution of AI to revenue growth is crucial, with companies like Adobe projecting $250 million in annual recurring revenue from AI products by the end of 2025 [15]. - Feedback from customers regarding SaaS leaders' innovations and the development momentum of AI-native companies will be essential in assessing their long-term impact on existing profit pools [15].

Core Insights - 2023 is seen as the "explosive year" for artificial intelligence (AI), while 2025 is anticipated to be a dawn of clarity for the industry, with clearer paths for startups and established companies [1][2] Group 1: Investment Trends - Bessemer, a renowned investment firm, has invested over $1 billion in AI-native startups since 2023, indicating strong confidence in the sector [1] - The report highlights that traditional SaaS companies are becoming the largest beneficiaries of AI technology [1] Group 2: Growth Patterns of AI Startups - Bessemer identifies two primary growth paradigms for AI startups: "supernova" and "meteor" [3] - Supernova companies can achieve $100 million in annual recurring revenue (ARR) within their first year, showcasing unprecedented growth in the software industry [6][7] - Meteor companies, while growing rapidly, maintain healthier profit margins and customer relationships compared to supernova companies, achieving $300,000 ARR in their first year and growing fourfold [8][9] Group 3: AI Industry Evolution - The AI industry is entering a second phase where defining problems becomes more critical than merely solving them, with a shift towards building systems that interact effectively with the real world [10][11] - Innovations in AI are leading to a reconfiguration of foundational infrastructure, focusing on integration and continuous learning [11][12] Group 4: Memory and Context as Competitive Advantages - Memory and context are emerging as new competitive advantages in AI, with systems that can remember and adapt becoming essential [13][16] - The Model Context Protocol (MCP) is gaining traction as a standard for AI systems to access external APIs and tools, simplifying integration for developers [14][15] Group 5: Disruption of Traditional Software Systems - AI is poised to disrupt traditional enterprise software systems, transitioning from record-keeping systems to action-oriented systems that can automate workflows [20][21] - New AI-native tools are emerging that not only store data but also act on it, significantly enhancing productivity and reducing implementation times [20][21] Group 6: Vertical AI as a Lever - Vertical AI is gaining traction, particularly in industries that have historically resisted technology adoption, with significant potential for market disruption [28][29] - Companies in healthcare, legal, and education sectors are rapidly adopting AI-native tools to automate workflows and improve efficiency [29][30] Group 7: Future Opportunities and Challenges - The next wave of AI applications will focus on deep integration into daily life, with opportunities in areas like travel and shopping [40][41] - Founders are encouraged to focus on specific trends, such as memory, action systems, and vertical AI, to navigate the evolving landscape [43][44]

Core Viewpoint - The market is experiencing significant panic selling in the software sector due to concerns that artificial intelligence (AI) will replace traditional software solutions, particularly following the release of advanced AI models like GPT-5 and Claude [1][4][10] Group 1: Market Reaction - European software stocks faced a sharp decline, with SAP's stock dropping 7.1%, resulting in a market value loss of nearly €22 billion, marking the largest single-day drop since late 2020 [1] - Other companies like Dassault Systèmes and Sage Group also saw substantial declines, with many software stocks losing double digits since mid-July [1][4] - In the U.S., Monday.com experienced a 30% drop, while Salesforce and Adobe have seen declines of over 25%-30% this year [5] Group 2: AI Impact - The rapid iteration of AI models is perceived as a direct threat to the core business models of software and data service companies, including financial data providers and data analytics platforms [4][8] - Fund managers are increasingly aware that each new generation of AI models could significantly outperform previous versions, challenging existing business logic [4] Group 3: Valuation Sensitivity - The software sector's high valuations are amplifying the impact of negative sentiment, with the average P/E ratio of STOXX600 around 17 times, while SAP's P/E ratio is close to 45 times [9] - High valuations make these companies particularly sensitive to any potential negative news [9] Group 4: Long-term Outlook - Despite the prevailing narrative that AI will consume software, some analysts believe that not all software will be replaced, especially those deeply integrated into customer workflows and possessing unique proprietary data [9][10] - Companies like Experian, which have unique data and are embedded in financial processes, are seen as having strong competitive advantages [9]