What happened? SAP today announced two partnerships with Amazon AWS (link) and OpenAI (link) related to domestic sovereign cloud workloads. SAP''s shares rallied +3% intra day on the news, though closed +0.80%. BNPP Exane View: These deals validate SAP''s unique positioning as the European gateway to leverage leading US Cloud and AI technology in a compliant manner suitable for sensitive industries such as public sector (and others to come), whilst mitigating the risk of SAP having to invest the required capex to provide the underlying infrastructure. In terms of impact for SAP, the AWS partnership should facilitate an acceleration in German public sector migrations to the cloud, including SAP''s cloud applications, which may have been limited in the past due to EU data sovereignty regulations. Amazon is committing EUR7.8bn investment as part of this AWS European Sovereign Cloud offering, separate and independent from AWS''s existing Regions, and will have no critical dependencies on non-EU infrastructure. The offering will include SAP BTP (Business Technology Platform) and Cloud ERP (Enterprise Resource Planning). At first glance this partnership mitigates the risk of SAP having to invest additional capex into its own cloud infrastructure while benefitting from accelerated Cloud migrations of German public sector SAP workloads. The OpenAI partnership will run on Microsoft Azure technology through SAP''s Delos sovereign cloud and is planned to launch next year. In our view the upside to SAP here is the accelerated adoption of OpenAI technology among German public sector, and possibly adoption of SAP''s agentic AI solutions across its application suite powered by OpenAI LLMs and running on Microsoft Azure infrastructure. SAP / AWS partnership (link) Amazon Web Services (AWS) and SAP unveiled plans to make SAP Sovereign Cloud capabilities available on the AWS European Sovereign Cloud, a new, independent cloud for Europe backed by a planned EUR7.8 billion...