This article first appeared on GuruFocus .

SAP SE ( NYSE:SAP ), Europe's enterprise-software powerhouse, surged approximately 4.8% to $221.93 Thursday after Salesforce's strong results revived confidence across the software sector. The market's message was blunt: generative AI may strengthen established platforms instead of destroying them.

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SAP entered the rally with 22.93 billion of current cloud backlog. Second-quarter cloud revenue jumped 24% at constant currencies to 6.28 billion, while the backlog expanded 26%. Management held its 2026 cloud-revenue target at 25.8 billion to 26.2 billion despite lowering its profit outlook after acquisitions.

The valuation snapshot sharpens the opportunity: SAP's $221.93 share price sits 15.67% below its $263.18 GF Value estimate. That discount offers room for upside, but the company must deliver. Backlog needs to become revenue, acquisitions must generate returns and AI must produce new salesnot simply protect existing contracts.