German software firm SAP SE has overtaken Danish pharmaceutical company Novo Nordisk A/S to become the most valuable publicly traded company in Europe.
On Monday, SAP’s shares climbed by as much as 2.3%, bringing its market valuation to approximately €317 billion ($344 billion). This increase allowed it to surpass Novo Nordisk, which has seen its stock price drop 16% this year due to disappointing results from trials of its new weight-loss medication, CagriSema.
Over the past year, SAP’s shares have surged by 42%, driven by a robust shift from traditional on-premise servers to cloud-based IT infrastructure. This transition has enabled the company to offer more profitable products that include artificial intelligence features, resulting in enhanced revenue growth. Analysts predict that SAP’s sales will rise by 12% this year, which would represent the company’s fastest annual growth rate in the last decade. Operating profits are also expected to increase significantly, following a restructuring plan announced in January 2024.
According to Bloomberg data, SAP has been the largest contributor to a 30% rise in the benchmark Stoxx 600 Index since late 2022. During this period, SAP’s stock price has more than doubled, accounting for around 8% of the index’s overall gain. In contrast to SAP’s consistent upward trajectory, other major European companies have faced difficulties. ASML Holding NV is dealing with weak orders from key clients and tightening export restrictions on chip manufacturing equipment to China. Novo Nordisk has lost its top position in Europe after its stock price nearly halved since peaking in June. The company faced additional setbacks on Monday when analysts at Intron Health downgraded their recommendation from buy to sell.
LVMH briefly held the title of Europe’s largest publicly traded company in January, but its shares subsequently fell amid a broader downturn in luxury goods stocks.
