SAP Standout Brings Big Boost to 3 Holdings

Tuesday's market rebound looks to continue on Wednesday as President Trump walked back comments about Fed Chair Powell, shared that he will not play “hardball” with China and telegraphed that tariffs on China’s goods would drop “substantially” if the two countries can hammer out a trade deal. However, just because Trump is now willing to deal, that doesn’t necessarily mean there will be an accelerated path to an agreement.

Leading Trump to reframe his position, on Tuesday the International Monetary Fund warned of dire economic consequences from the president’s trade war. It slashed America’s growth forecast for 2025 from 2.7% to 1.8% and downgraded projections for China, India and the G7. Trump also met earlier this week with executives from Walmart WMT, Target TGT, Home Depot HD and other retailers with the likely topic being China tariffs and the impact to their businesses.

Those developments are being positively received by the market as they help dial back some uncertainty. Not all, but some.

Coming up on Wednesday morning, we will examine what the April Flash PMI data has to say about the economy and the initial impact of Trump tariffs. At 10 a.m. ET, U.S. Treasury Secretary Scott Bessent will give a speech on “the state of the financial system.” Following comments from Bessent on Tuesday that “there will be a de-escalation” in Trump’s trade war with China, we’ll be looking to see what other messages he sends today.

SAP Brings Relief

Also helping lift the tech sector, SAP SE SAP delivered consensus-topping March quarter EPS led by double-digit cloud and software revenue growth. The standout comment to us during the company’s earnings call on Tuesday night was that about half of its cloud order entry deals included AI use cases.

Because corporate guidance is in many ways more important than March 2025 results, let’s turn to SAP’s outlook. Here’s what it had to say:

"While the prevailing dynamic environment implies elevated levels of uncertainty and reduced visibility, SAP currently continues to expect: €21.6 – 21.9 billion cloud revenue at constant currencies (2024: €17.14 billion), up 26% to 28% at constant currencies. €33.1 – 33.6 billion cloud and software revenue at constant currencies (2024: €29.83 billion), up 11% to 13% at constant currencies."

That outlook is supported by SAP’s March quarter-end current cloud backlog of €18.2 billion, up 29% in constant currency, and supports our view that companies will continue to invest in productivity-led initiatives. All in all, we see SAP’s results, comments, and guidance as very positive for the Portfolio’s positions in ServiceNow NOW and Elastic ESTC, but it supports our recent comments about Axon Enterprise AXON as well.

Intel: Kitchen Sink Guidance

Ahead of releasing its quarterly results on Thursday, reports indicate Intel INTC will announce a large round of layoffs, potentially more than 20% of its headcount.

Expectations call for the company to deliver a fourth consecutive drop in revenue, but we’ve seen new management teams deliver “kitchen sink” guidance as they take the reins and reset expectations. We’ll be interested in new CEO Lip-Bu Tan’s turnaround plans as it looks to catch up with others like Nvidia NVDA, Marvell MRVL and Qualcomm QCOM that have been eating Intel’s lunch.

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At the time of publication, TheStreet Pro Portfolio was long NOW, ESTC, AXON, NVDA, MRVL and QCOM.