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Let's look at some of the stocks on the move today in Europe. I'm Lizzie Burden with Stephen Carroll and rejoined by Bloomberg reporter Chloe Melly. Chloe, I'm looking at SAP shares down ten point eight percent. It's a dramatic round turn. This is the most valuable software company in Europe. How did it get here?
Yeah, it's a very very bad day forair SAP.
So the reason why it's done so much today is because the growth the growth are in its cloud backlog disappointed investors quite a lot and was below the company's at target. And so that's a big problem given that the cloud business is absolutely essential to SAP's a strategy, and the CEOs started this pivot a few years ago, back in twenty twenty, from selling software licenses at that clients would operate on local servers to offering software subscriptions
that were in the cloud directly. So that was a move that investors were really keen on at first, and the share price actually hit a record last year on the back of that, but now there are some concerns around the potentially negative impact of artificial intelligence on that strategy.
There's worries that AI powered tools can potentially displace what enterprise software companies like SAP can actually offer, and SAP is trying to kind of get ahead of this and offer customers AI applications in the cloud, but then you know, the disruption from new entrants into the market is.
Still a threat.
And this disappointing cloud growth backlog is it was taken as very very disappointing from investors, and despite the fact that it also announced a ten billion or a buyback, the shares are still way down. So that really tells you the extent of how disappointed investors were, because usually buybacks get them quite excited.
Yeah.
Indeed, and in case anyone's a bit believed by the term cloud backlog, this is services essentially that they have contracted and sold but not yet recognized as revenue. So it's the indicator, as you say, Chloe, of the revenue that will come down the line from cloud for the company. So that's why it's getting so much focused today. But we want to turn next to st Micro's results beating estimates, how are investors receiving them?
Yeah, it seems that software with SIP he's not doing too well.
But then the hardware part of that tech market is so st Micro is a supplier of chips for a Tesla and Apple and then also to industrial companies and car makers, and its outlook for sales in the first quarter was ahead of expectations, and that was seen as a sign that there's a recovery potential recovery in those
end markets. And this also echoes the results that we've got from Texas Instruments, which is a company over in the US, which also reported this week and also provides those chips mostly to customers that are not AI customers, to industrial, automotive, personal electronics clients, and so the outlook for the first quarter from that company was also surprising good.
And so this indicates that those customers in industrial and markets, automotive and markets have started to work through the massive inventory that accumulated post pandemic and are starting to buy again and invest again.
So it seems that chip demand is picking.
Up beyond AI, although it's still worth noting that the auto sector is still a little bit weaker, but this is quite encouraging for the sector as a whole. Now.
Clariy Deutsche shares are down two point eight percent. Deutsche Bank out with earnings this morning, but it seems they've been overshadowed by that.
Raid on them.
Yeah, so at first onance, it looks really positive for Doutsche Bank.
As you said, there's strong earnings, really.
Solid fixed income trading, a one billion euro buy bag. But the problem is that, as you said, the results were overshadowed by this raid on the on the Dotchebak offices, which happened just yesterday.
And this is a probe that is around money laundering.
It's centered around it's said to be centered around the past dealings of staff members with firms that were linked to Roman Abramovich, who is now sanctioned. And this is really a fresh headache for the CEO. And it's not the only kind of legal challenge that he is facing at the moment. There's also another lawsuit which was filed by a group of former managers that alleged that they
were wrongfully blamed in an accounting scandal at Montepesci. So there's a few different challenges that the Dotche Bank is facing, and those are taking center stage now. And unfortunately for the bank, the great results that they posted were just maybe not enough to make investors forget about those illegal headaches coming down the line.
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