SAP, MiMedia, Alibaba – Why Cloud Services are the Gold mines of the Future

SAP – Cloud boom and AI drivers consolidate growth trajectory

2024 marked a milestone in SAP's cloud strategy. Cloud revenues rose by 25% to EUR 17.1 billion, driven by the cloud ERP suite, which achieved a plus of 33%. The total cloud backlog reached a record EUR 63.3 billion, an increase of 40% compared to 2023. This means that the Company generates 83% of its revenues from recurring revenues, which increases predictability and stability. Despite restructuring costs of EUR 3.1 billion, the adjusted operating profit increased by 25%. Although free cash flow fell to EUR 4.1 billion, net liquidity remained solid at EUR 1.7 billion.

SAP is focusing on more artificial intelligence (AI). With more than 130 AI use cases and the generative assistant "Joule" with 1,300 functions, the automation of business processes is being driven forward. Integrating AI into the Business Technology Platform enables customers to flexibly manage supply chains and accelerate software development. The acquisition of WalkMe also strengthens the cloud migration tools. With solutions such as SAP Signavio and LeanIX, the Company supports companies in optimizing their IT architecture – a crucial lever in times of digital transformation.

For 2025, SAP forecasts accelerated cloud growth of 26-28%, equivalent to EUR 21.6-21.9 billion, and an adjusted operating profit of EUR 10.3-10.6 billion. Free cash flow is expected to double to EUR 8 billion. Risks remain in the form of a volatile macroeconomy and competitive pressure from Microsoft and Oracle. However, the combination of stable cloud momentum, AI leadership, and high customer loyalty – over 34,000 cloud customers use SAP Business AI – suggests that the momentum will continue. The recently announced dividend increase underlines management's confidence in the future. The share is currently trading at EUR 247.80.

MiMedia - Strategic alliance with Walmart

MiMedia Holdings' core business is based on recurring revenues from cloud subscriptions and in-app advertising. This year will see the start of mass delivery of pre-installed devices – in the US alone, the Company sees a gross revenue potential of over USD 125 million. The partnership with Media Digital Group (MDG), a specialist in the monetization of digital content, extends the reach, as MDG has a large user base and good relationships with network operators. The media gallery and cloud services are offered in over 35 countries. With software margins exceeding 80% and low implementation costs of less than USD 25,000 per partner, there is an opportunity to scale MiMedia's product profitably.

On March 15, 2025, MiMedia Holdings set a clear course with a strategic cooperation. The Company announced a partnership with Walmart Latin America. The cloud platform for all types of personal media will be integrated into millions of smartphones from Walmart's subsidiary Bait in Mexico, which, with 18.3 million users, is the third-largest mobile service provider in the country and growing rapidly. MiMedia is also being integrated into Walmart's digital ecosystems, including payment and health apps. At the same time, US partner Orbic confirmed at the Mobile World Congress the integration of MiMedia's gallery into new Caterpillar smartphones for the rugged device market, which is expected to grow to USD 3.7 billion by 2033.

MiMedia focuses on regions with high smartphone growth, such as Latin America, Africa, and Southeast Asia. By 2025, 1 billion new Android devices are expected to be sold here. Integration into local ecosystems – as is now the case with Walmart – and cooperation with telecommunications providers should accelerate market penetration. With 35 million device installations under contract in the next two years and an active pipeline for further partnerships, the Company is cleverly positioning itself away from the tech giants. The share price has not yet been able to benefit from the good news and is currently trading at CAD 0.49.

Alibaba – China's pioneer in the AI race

Alibaba is cementing its role as a key player in the global AI landscape. With the QwQ-32B model, the Company is demonstrating that efficiency and performance do not have to depend on size. The model achieves comparable results to the 671-billion-parameter competitor DeepSeek-R1 – with only 32 billion parameters. This compactness offers cost advantages, as companies can already use the model with standard GPUs. Alibaba's open-source strategy further strengthens its ecosystem, while access to China's elite engineers and government funding accelerates development. This gives Alibaba a clear competitive advantage in the race for AI leadership.

Alibaba's latest quarterly figures underscore the viability of its AI strategy. Revenues rose 8% to USD 38.38 billion, driven by the cloud business, which grew 13%, with increasing demand for AI services. The integration of AI into e-commerce, logistics, and financial services is having a measurable impact – from higher user engagement to optimized operating costs. Despite a 66% rise in its share price since the beginning of the year, the valuation still looks attractive with a P/E ratio of 20, especially compared to US competitors like Amazon, which has a P/E ratio of 35. Analysts see room for a revaluation here.

Alibaba's strength lies in the synergy between government support and entrepreneurial agility. Initiatives like the USD 47.5 billion "Big Fund III" chip fund are strengthening the domestic semiconductor industry, which is a critical foundation for AI ambitions. However, success depends on political favor. The reliance on Beijing's goodwill was evident in the regulatory crackdowns on founder Jack Ma in 2023. In addition, competitors like Tencent or Baidu could gain market share with their own AI models. Despite these risks, Alibaba remains a key player in China's mission to take the AI lead – with the potential to challenge global tech giants. Currently, the stock can be bought for USD 147.57.

The cloud era is in full swing: Microsoft, SAP, MiMedia, and Alibaba are demonstrating how AI integration, scalable subscription models, and global partnerships are shaping the market. While tech giants like Microsoft dominate the AI infrastructure with billions invested in data centers, SAP focuses on stable cloud ERP revenues and AI-driven process automation. MiMedia is using smart alliances in emerging markets to place its cloud technology on smartphones. Alibaba combines government funding with efficient AI development. Despite risks like competitive pressure and political dependence, the cloud remains a goldmine. The market is expected to grow to USD 2.4 trillion by 2030, driven by an insatiable hunger for AI.