Shares in SAP (ETR:SAP) jumped 5.5% in early trading after the German software giant raised its full-year outlook, driven by strong growth in its cloud business during the third quarter.
Cloud revenue surged 27% to €4.35 billion, thanks in part to a 36% increase in sales of its Cloud ERP Suite.
CEO Christian Klein highlighted that artificial intelligence played a significant role in this growth, with AI use cases included in about 30% of cloud contracts during the quarter.
Operating profit rose 28% to €2.24 billion, beating expectations, aided by cost-cutting and limited new hires, according to CFO Dominik Asam.
The company is also restructuring, potentially cutting up to 10,000 jobs as it adapts to the AI era.
It raised its full-year cloud and software revenue forecast to €29.5-29.8 billion, with operating profit expected to hit €7.8 billion.
"SAP delivered another strong quarter, with a nudge higher for guidance despite acknowledging macro headwinds. The upgrade cycle remains strong," said UBS in a short note following results.
The Swiss bank remains a 'buyer' of the stock up to €237 a share. In the early session on Tuesday, the stock was up €11.60 at €222.35.