HSBC initiated coverage of SAP with a Hold rating, arguing the software giant's share price already accounts for its cloud growth trajectory. The bank set a target of €178, down from the current €194, citing limited upside after a strong run. U.S.-listed shares fell 3% on the news.

The analyst expects revenue to grow at a 9.6% compound annual rate through 2028, fueled by customers migrating from on-premise software to the cloud. HSBC projects about 5% of SAP's on-premise customer base will shift annually, a move that historically boosts SAP's revenue by roughly 2.5 times.

However, HSBC flagged potential downside risks, including overly optimistic market assumptions about migration pace and margin expansion. It noted that roughly 60% of on-premise customers have yet to start moving, with a 2027 maintenance fee hike and 2030 support deadline looming as key catalysts. A ServiceNow-Rimini Street partnership could also slow upgrades.