Shares of SAP SE, the German software firm, soared by seven percent to an all-time high following the company’s optimistic outlook on cloud revenue growth and plans to restructure job roles, with a focus on artificial intelligence (AI)-driven business areas.
To prepare for the future, SAP announced a 2 billion euro ($3.3 billion) investment program aimed at retraining employees with AI skills or providing voluntary redundancy programs. These efforts reflect SAP’s belief that AI will fundamentally transform its business. As a part of this transformation, SAP plans to embed OpenAI’s ChatGPT technology into its products, a move that it initiated last year.
Investment strategist Jürgen Molnar at brokerage RoboMarkets commented, “The right adjustments are being made, and the company is being reorganized to prepare it for the age of artificial intelligence.” While some employees may be affected by these changes, Molnar sees this as a strategic decision rather than a cost-cutting measure, opening up new opportunities for SAP.
SAP’s focus on AI aligns with the trend seen in other tech giants like Google and Microsoft, who have shifted their attention to AI software and automation. This shift has also led to layoffs in recent months as these companies aim to streamline their operations and leverage AI’s capabilities.
In addition to the AI-related plans, SAP expects to achieve double-digit revenue growth from its key cloud business and overall operating profit for the current year. The company reported a 23 percent growth in cloud revenue, and its operating profit rose by 13 percent in 2023. Looking ahead, SAP anticipates cloud revenue to increase by 24 to 27 percent in 2024.
SAP’s chief financial officer, Dominik Asam, expressed satisfaction with the company’s performance, stating, “We kept our promise and achieved double-digit non-IFRS operating profit growth despite an adverse macro environment.” Asam aims to further enhance profitability in the coming year.
While SAP adjusted its medium-term outlook, lowering its 2025 operating profit target to 10 billion euros, the company remains optimistic about its future prospects in the rapidly evolving AI landscape.
Frequently Asked Questions (FAQs): SAP’s Focus on Artificial Intelligence (AI)
1. What is the reason for the increase in SAP SE’s shares?
Shares of SAP SE, the German software firm, surged by seven percent to a record high due to the company’s positive outlook on cloud revenue growth and its plans to restructure job roles with a focus on AI-driven business areas.
2. How is SAP preparing for the future?
SAP announced a 2 billion euro ($3.3 billion) investment program to retrain employees with AI skills or provide voluntary redundancy programs. This investment reflects SAP’s belief that AI will significantly transform its business. As part of this transformation, SAP plans to embed OpenAI’s ChatGPT technology into its products.
3. Is SAP’s strategic decision of restructuring related to cost-cutting measures?
No, investment strategist Jürgen Molnar at brokerage RoboMarkets sees SAP’s decision to reorganize as a strategic move rather than a cost-cutting measure. He believes it will open up new opportunities for the company in the age of artificial intelligence.
4. How does SAP’s focus on AI compare to other tech giants?
SAP’s focus on AI aligns with the trend observed in other tech giants such as Google and Microsoft. These companies have also shifted their attention towards AI software and automation, which has resulted in layoffs as they streamline operations and leverage AI capabilities.
5. What are SAP’s expectations for revenue growth?
SAP expects to achieve double-digit revenue growth from its key cloud business and overall operating profit for the current year. The company reported a 23 percent growth in cloud revenue, and its operating profit rose by 13 percent in 2023. For 2024, SAP anticipates cloud revenue to increase by 24 to 27 percent.
6. What is SAP’s chief financial officer’s response to the company’s performance?
SAP’s chief financial officer, Dominik Asam, expressed satisfaction with the company’s performance. He stated, “We kept our promise and achieved double-digit non-IFRS operating profit growth despite an adverse macro environment.” Asam aims to further enhance profitability in the coming year.
7. What is SAP’s updated operating profit target for 2025?
Although SAP adjusted its medium-term outlook, lowering its 2025 operating profit target to 10 billion euros, the company maintains optimism about its future prospects in the rapidly evolving AI landscape.
Key Terms/Jargon:
– SAP SE: A German software company known for its enterprise software solutions.
– Cloud Revenue: Revenue generated from cloud-based services, such as software licenses and subscriptions delivered over the internet.
– Artificial Intelligence (AI): The simulation of human intelligence in machines that can perform tasks that typically require human intelligence, such as learning, reasoning, and problem-solving.
– Restructuring: The process of making significant changes to the organization, operations, or resources of a company to improve performance, efficiency, or focus on specific areas.
– OpenAI: An artificial intelligence research organization.
– ChatGPT: A technology developed by OpenAI that enables machines to generate human-like text responses in natural language conversations.
Suggested Related Links:
– SAP Official Website
The source of the article is from the blog coletivometranca.com.br