SAP Counts on AI and Cloud to Reverse a Brutal Year as Q2 Results Loom
Published on 07/20/2026 at 22:22 | Redaktion boerse-global.de
SAP enters a pivotal week with its stock trading near the bottom of a 52-week range and a freshly closed €1 billion-plus AI acquisition in hand. The company faces a critical test on Thursday, when it reports second-quarter and first-half results after the European close — numbers that will reveal whether its aggressive push into autonomous AI agents and cloud services can offset a punishing macroeconomic and sector-wide headwind.
The stock, at €138.90 on Monday, sits 47.3% below its 52-week high of €263.55 and just 6% above its low of €130.80, set in late June. The sell-off reflects a double squeeze: enterprises are diverting IT budgets toward hardware amid surging chip prices — a trend that hammered IBM, sending its shares down by roughly a quarter last week and dragging the broader software sector lower. SAP was not spared, and the chart still looks fragile. The 50-day moving average of €144.61 sits about 4% above the current price, while a break above €145 would be considered a bullish signal. On the downside, support sits between €130 and €135, and the relative strength index of 47.9 suggests a neutral, wait-and-see market before the earnings release.
Against that backdrop, SAP is doubling down on AI. On Monday, the company unveiled the next phase of its "SAP Business AI" strategy, with Chief AI Officer Jonathan von Rueden outlining enhancements for the second quarter of 2026. The centrepiece is the "SAP Autonomous Suite", which deploys AI agents to handle complex workflows in finance and human resources largely autonomously, with humans remaining in oversight. The existing assistant, Joule, is being repositioned as the central workplace for enterprise AI. This push is meant to counter growing investor skepticism that traditional software vendors can withstand the pressure from specialist AI applications.
The formal closing of the acquisition of Freiburg-based AI startup Prior Labs adds a deeper layer. Founded only 18 months ago by Frank Hutter, Noah Hollmann and Sauraj Gambhir, Prior Labs specialises in tabular foundation models — the kind of structured corporate data that underpins most enterprise software. SAP has committed to invest more than €1 billion in the technology over the next four years. Customer testimonials already offer glimpses of potential: Hitachi uses Prior Labs' technology for predictive maintenance of a Spanish high-speed train, and OxCan deploys it for early lung-disease detection. For SAP, the deal is a clear signal that it intends to build an autonomous-enterprise vision, not just bolt on chatbots.
Should investors sell immediately? Or is it worth buying SAP?
Parallel to the acquisition, SAP released several AI products in the second quarter: Joule Work as an early-adopter programme, a generally available mobile app, voice functionality for Joule, and autonomous agents for supply chain and finance. Early results are encouraging. Bosch reports a 20% productivity gain, Aeropuertos Argentina a 16% cost reduction, PwC a 60% efficiency improvement in tax processing, and Turkish retailer LC Waikiki a 40–60% acceleration in HR cycles.
Yet the market remains unconvinced. JPMorgan analyst Toby Ogg, in a note dated 17 July, reiterated a "Neutral" rating on SAP with a price target of €175. He argues that enterprise software spending is structurally set to decline as budgets shift toward cloud infrastructure, observability and cybersecurity — a headwind SAP must navigate despite its cloud and AI push. Morningstar takes a far more bullish view, holding a five-star rating and a fair value estimate of €265, nearly double the current price, pointing to the Prior Labs acquisition as a long-term differentiator.
All eyes now turn to Thursday's numbers. The consensus is for cloud revenue to rise about 22% to €6.26 billion, with total revenue up 9% to €9.85 billion. The most closely watched metric will be the current cloud backlog, which stood at €21.9 billion at the end of March, up 20% year-on-year. That figure is the best leading indicator of future growth and will show whether the fresh slate of AI offerings is translating into real contract momentum.
SAP at a turning point? This analysis reveals what investors need to know now.
One longer-term curiosity is SAP's own large language model, ABAP-1, trained on 250 million lines of the company's proprietary ABAP code. In internal benchmarks, it lagged behind Claude Opus 4.5 for pure code understanding, and GPT-5 achieved a 77.11% success rate after five rounds with compiler feedback (versus 19.28% without). SAP therefore recommends ABAP-1 primarily for explaining code rather than generating it, and access through Joule for Developers remains free until September 2026. For now, the market's focus is squarely on whether SAP's broader AI bet can translate into a growth narrative strong enough to pull the stock out of its deepest trough in years.
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