SAP SAP has overtaken Danish pharmaceutical group Novo Nordisk NOVO B to become Europe’s most valuable publicly listed company amid renewed investor confidence in European stocks. With a market capitalisation now hovering around EUR 314 billion, the German software giant has edged past Novo Nordisk, which has seen its valuation slip to about EUR 310 billion on March 24. The reversal reflects diverging investor sentiment in tech versus pharma, but also marks a moment of vindication for SAP’s long-term pivot to the cloud.
The rally in SAP shares — up over 40% in the past year — has been fueled by investor enthusiasm for cloud computing and artificial intelligence, as well as growing confidence in SAP’s transformation strategy. “After some years of uncertainty, investor confidence is back in SAP’s growth outlook and leadership position in the ERP software market, as reflected in our recent moat upgrade to wide for the company”, Morningstar equity analyst Rob Hales said.
Hales upgraded SAP’s moat rating to wide from narrow in February and raised the fair value estimate by 76% to EUR 265. “With about 80% of legacy on-premises ERP customers now committed to SAP’s cloud platform in some way, the major risks of customer churn have been neutralized.”
“We expect a solid cloud revenue growth in the midterm, driven by a two- to threefold lift in contract value when customers migrate to the cloud,” Hales noted. “This is being complemented by strong cross-selling and success in reaching smaller customers previously underserved by SAP.”
However, at current prices, the stock is now trading in fairly-valued territory.
Meanwhile, Novo Nordisk has lost nearly half its market value since mid-2024, following its meteoric rise on the back of GLP-1 weight-loss drugs like Ozempic and Wegovy. Disappointing trial data for its next-generation treatment, CagriSema, and rising competition in the obesity drug space have triggered a market reassessment.
After the stock’s recent losses, it now trades in four-star territory. Morningstar analyst Karen Anderson is positive about the company’s upcoming sales volumes. “We’re raising our fair value estimate to DKK 640 per share from DKK 600 to incorporate a stronger near-term outlook for Novo, and we remain confident in the firm’s innovation supporting its wide moat”, she said in a research note on Feb. 5.
Is SAP Too Big for the German Market?
SAP’s strong showing has also propelled the Morningstar Germany Index to global outperformance in 2025. The company also held the largest weighting in the country’s DAX benchmark, sometimes exceeding the 15% cap previously set by Deutsche Börse: The DAX has a 15% weighting limit per single stock.
This has fueled concerns that the Walldorf, Germany-based company could turn its back to the German stock market. Linde LIN did just that in 2023: After the industrial gas manufacturer crossed the weight cap – which was 10% at the time – it transferred all its shares to the New York Stock Exchange in February 2023, because the company hoped for better price opportunities for its shares there. In Frankfurt, the cap was adjusted to 15% after Linde’s departure, but it is now becoming apparent that this may not be enough either - prompting exchange provider Deutsche Börse to launch a new uncapped version of the DAX earlier this year.
This concentration also reflects a broader shift in Germany’s economic identity: SAP now accounts for more of the DAX than traditional industrial champions like Volkswagen or Mercedes-Benz.
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