Barclays Optimistic on SAP as Biggest AI Beneficiary in European Software Sector, Downgrades TeamViewer Rating

Investing.com - Barclays states that although European software stocks have declined significantly this year, the sector may still offer selective opportunities, and points out that there is a notable gap between potential AI winners and losers within the sector.

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The framework assessing AI exposure shows that major software providers differ significantly in competitive positioning and monetization potential.

Led by analyst Sven Merkt, the team says that while valuations have become more attractive after recent corrections, “it’s hard to say the software sector has bottomed out,” and notes that the sector remains sensitive to AI-related news and is still heavily held by pure long investors.

Within coverage, analysts believe SAP is the biggest beneficiary of AI-driven enterprise workflow transformation. Its deep integration across industries, strong record-keeping position, and extensive data infrastructure put it in a particularly advantageous position as automation spreads into enterprise software.

“If the company executes well, SAP could become a true AI beneficiary,” analysts wrote, maintaining an overweight rating and a target price of €240.

They believe the risk of competition from AI-native new entrants is limited, and as automation is embedded into finance, supply chain, and procurement workflows, monetization capabilities are expected to improve.

Temenos also receives positive ratings, with Barclays maintaining an overweight rating and a target price of CHF 85. The analysts state that this core banking software provider is “largely unaffected by AI,” as high entry barriers, regulatory complexity, and high switching costs support its position.

“We believe the risk of new entrants copying or replacing Temenos’ core products is limited,” they wrote.

In contrast, Barclays has turned cautious on TeamViewer, downgrading the stock from overweight to neutral and lowering the target price from €7 to €5. The analysts suggest that AI could weaken the company’s long-term growth prospects, as increasing automation assistants reduce demand for traditional remote support tools.

The team also points out that Sage is the company with the greatest risk exposure within their coverage, maintaining a reduce rating due to the potential for AI-native competitors to intensify pricing and switching cost pressures in the small business accounting market.

Additionally, Barclays maintains an overweight rating on Emma Dis and Nem, while Dassault Systèmes remains neutral.

Overall, analysts say, “We see significant long-term value opportunities in the sector, but for shorter-term investors, we believe the bigger opportunity now is to differentiate potential AI winners and losers within the sector.”