The Oakmark Global Select Fund initiated a new position in SAP SE during the second quarter of 2026. The disclosure was made in the fund’s quarterly portfolio update filed on July 16. The fund, co-managed by Bill Nygren and Harris Associates, is known for its concentrated portfolio of high-conviction, value-oriented global equities. This acquisition adds a leading European enterprise software provider to a portfolio that typically holds between 15 and 25 stocks. The fund’s total assets under management were approximately $12.6 billion as of the quarter's end.
Context — Why this matters now
The investment arrives as SAP nears the completion of a multi-year strategic shift to a cloud-centric business model. The company’s Rise with SAP program, launched in 2021, aimed to migrate its vast on-premise customer base to its cloud platform. This transition initially pressured profit margins but has recently begun yielding accelerated revenue growth. Enterprise software demand is strengthening as businesses globally prioritize digital transformation and AI integration into core operations. The current macroeconomic backdrop features stable, though elevated, interest rates, with the ECB holding its deposit facility rate at 3.75%. This environment favors established, cash-generative technology firms with pricing power. Oakmark's timing suggests a belief that SAP’s restructuring costs are largely in the past and future earnings power is undervalued by the market.
Data — What the numbers show
SAP’s financial performance has shown marked improvement. For the first quarter of 2026, the company reported a 10% year-over-year increase in cloud revenue, reaching 4.2 billion euros. Total revenue grew 7% to 8.5 billion euros. The non-IFRS operating profit margin expanded by 150 basis points to 25.5%. SAP’s market capitalization stands at approximately 185 billion euros, making it the most valuable company on Germany’s DAX index. The stock has outperformed the index year-to-date, with a gain of 15% compared to the DAX’s 8% rise. The table below illustrates the acceleration in key cloud metrics.
| Metric | Q1 2025 | Q1 2026 | Change |
|---|
| Cloud Revenue | 3.82B EUR | 4.20B EUR | +10% |
| Current Cloud Backlog | 12.6B EUR | 14.1B EUR | +12% |
| Cloud Gross Margin | 72% | 74% | +200 bps |
Analysis — What it means for markets / sectors / tickers
Oakmark’s endorsement is a significant vote of confidence for the entire European enterprise software sector. It may attract further institutional flows into peers like Dassault Systèmes and ASML, though the latter is more focused on semiconductor equipment. SAP’s strengthening competitive position could pressure smaller rivals and legacy IT service providers. A key risk to the investment thesis is a potential slowdown in European corporate IT spending if economic growth falters more than currently projected. Currency fluctuations between the euro and the US dollar also present a headwind for US-based fund returns. Current market positioning shows a moderate level of short interest in SAP, around 1.5% of float, suggesting potential for a short squeeze on positive earnings surprises. Flow data indicates net buying from European long-only funds throughout the quarter.
Outlook — What to watch next
SAP’s second-quarter 2026 earnings report, scheduled for July 24, is the immediate catalyst. Analysts will scrutinize cloud revenue growth and remaining performance obligation figures for signs of sustained momentum. The next European Central Bank meeting on September 12 will provide critical insight into the interest rate path, a key variable for growth stock valuations. Technically, SAP shares are testing a key resistance level around 160 euros; a sustained break above this level could signal further upward momentum. Support is seen near the 50-day moving average of 148 euros. The company’s annual Sapphire conference in November will be a platform for announcing new AI-driven product integrations.
Frequently Asked Questions
What is the Oakmark Global Select Fund's investment strategy?
The Oakmark Global Select Fund employs a concentrated value investing strategy, typically holding a small portfolio of 15-20 stocks selected for trading at a significant discount to the managers' estimate of intrinsic value. Co-managers Bill Nygren and Harris Associates seek companies with strong cash flow, competent management, and shareholder-friendly capital allocation. The fund's long-term horizon means new positions like SAP are viewed as multi-year investments, not short-term trades. This approach differs from more diversified global growth funds.
How does SAP's valuation compare to US software peers?
SAP trades at a forward price-to-earnings ratio of approximately 24x, a discount to major US peers like Salesforce (30x) and Microsoft (28x). This discount partially reflects its historical on-premise software business and its European listing. However, as cloud revenue becomes a larger portion of total sales—projected to exceed 50% in 2027—analysts anticipate this valuation gap could narrow. SAP's dividend yield of 1.5% is also higher than the average for the US software sector.
What are the primary risks of investing in SAP?
The primary risks include execution missteps in its cloud transition, intense competition from hyperscalers like Microsoft Azure and AWS, and macroeconomic sensitivity in its core European market. A deep recession could cause enterprises to delay software upgrade cycles and new implementations. geopolitical tensions affecting European trade or energy supplies could impact SAP's operational costs and the spending appetite of its customer base, which is heavily concentrated in manufacturing and industrial sectors.
Bottom Line
Oakmark's new SAP stake signals a belief that the software firm's cloud transition is succeeding and its stock remains undervalued.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
