SAP’s Cloud Ambitions Crush Margins, But OpenAI’s IPO Delay Offers a Brief Reprieve

The narrative around SAP is becoming a tale of two forces. On one side, a costly pivot toward artificial intelligence and cloud infrastructure is squeezing margins and drawing a fresh legal challenge from rival Celonis. On the other, a temporary lull in the AI disruption scare — sparked by reports that OpenAI’s IPO is now pushed back to 2027 — handed the German software giant a rare 4% pop on Friday, lifting shares out of a 52-week trough. But beneath the short-term relief, deeper structural headwinds remain stubbornly intact.

According to a New York Times report, OpenAI faces financial hurdles that have delayed its public listing indefinitely, defusing fears that generative AI would soon make traditional enterprise software obsolete. That news triggered a sector-wide reversal, with SAP and other supposedly vulnerable names staging the sharpest gains. The stock climbed to €136.54 in the session before edging up to €137.26, still down roughly 32% year to date. Oracle, by contrast, fell 3% on Friday as its deep cloud ties to OpenAI suddenly look less advantageous.

Yet even as the AI-panic narrative fades, the cost of SAP’s own AI ambitions is becoming more visible. Goldman Sachs analysts trimmed their gross margin forecast for the second half of 2026 to 72.8%, from just above 73%, pointing to the heavy capital needed for cloud scaling and new AI services. The company is also pressing ahead with acquisitions: it plans to close the purchase of Dremio in the third quarter and is committing a multi-billion-euro, four-year investment in Prior Labs to bolster its data analytics arsenal.

Should investors sell immediately? Or is it worth buying SAP?

A gigantic share buyback program has done little to arrest the slide. SAP has been repurchasing its own stock at an average price of roughly €161 — far above the current market price — raising eyebrows about the timing of the purchases. The shares now trade well below their 200-day moving average of €182.90, underscoring the extent of the sell-off.

Operationally, the engine keeps humming. Cloud revenue rose 27% on a currency-adjusted basis in the first quarter to nearly €6 billion, and the cloud order backlog expanded markedly. RBC Capital Markets’ Rishi Jaluria thinks the worst of the sentiment trough may already be behind, though he warns against premature exuberance: companies don’t swap out their software stacks for AI overnight.

Complicating the outlook further is an escalating antitrust battle. Celonis is expanding its lawsuit in California, adding allegations of trade secret theft and accusing SAP of steering customers away from competing process-mining tools toward its own Signavio software. A federal judge largely denied SAP’s motion to dismiss, forcing the company to hand over internal documents on pricing and contracts. The trial is scheduled for December 7, 2026. SAP has pledged to continue defending itself.

All eyes now turn to July 23, when SAP reports second-quarter results. The period is expected to be challenging, with management flagging slower growth as one-off effects from the first quarter drop out. But UBS analyst Michael Briest anticipates a better operating environment and maintains his buy rating with a €205 price target. Investors will be watching two metrics closely: the cloud order backlog and the gross margin. Those numbers will reveal whether SAP’s strategy of sacrificing near-term profitability for long-term AI-driven growth is actually paying off — and whether the stock’s recent bounce can be sustained.

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