SAP's Market Test Looms After €1B AI Acquisition and EU Probe Exit Fail to Revive Shares
Published on 07/20/2026 at 10:42 | Redaktion boerse-global.de
SAP shares remain pinned near their 52-week low as the software giant heads into second-quarter results on Thursday with a stock that has shed over a third of its value this year. The Walldorf-based company closed at €138.44 on Friday, down 1.81% on the session, pressured by a profit warning from rival IBM that has cast a shadow over the entire enterprise software sector.
The decline came despite two ostensibly positive developments: the European Commission’s decision to drop a cartel investigation into SAP on July 9, and the announcement that the group is spending more than €1 billion over four years to acquire Freiburg-based startup Prior Labs. The deal targets a niche slice of artificial intelligence known as tabular foundation models, which are trained specifically for the structured, spreadsheet-like data that underpins SAP’s core ERP business. The integration is planned to run over four years.
Yet analyst opinion on the stock remains sharply divided, with target prices ranging from €164 to €265. UBS analyst Michael Briest slashed his target from €205 to €164 over the weekend, maintaining a Buy rating but warning that the entire industry is struggling to monetize AI agents profitably. By contrast, Morningstar's Rob Hales held firm with a fair value estimate of €265 and a five-star rating, arguing that SAP's cloud growth trajectory is intact despite rising energy costs and geopolitical uncertainty. JPMorgan's Toby Ogg kept a Neutral stance and a €175 target, pointing to a potential shift in corporate IT spending away from traditional enterprise software toward cybersecurity and observability tools — a headwind that could weigh on SAP’s legacy license revenue.
Should investors sell immediately? Or is it worth buying SAP?
The divergence underscores the market’s uncertainty ahead of the Q2 release, scheduled for 22:05 CET on July 23. Consensus expectations call for cloud revenue growth of around 22%, with the current cloud backlog forecast to expand 23-24% — a slight deceleration from the 25% reported last year. Investors will also scrutinize margins, particularly as hardware costs, including memory prices, continue to climb. The IBM warning has stoked fears that companies are reallocating IT budgets toward necessary hardware and away from new software projects amid geopolitical tensions and a soft economic backdrop.
On the technical side, SAP’s stock sits 21.27% below its 200-day moving average of €175.84, and the relative strength index at 47.2 offers little directional clarity. The 50-day average, currently at €144.72, marks a potential near-term ceiling if the results can reignite buying interest. The shares are just 5.84% above the 52-week low of 130.80 euro set in late June. Since the start of the year, the stock has declined 33.55%, eroding much of the premium it commanded during the AI hype cycle of prior years when it traded above €263.
Management has signaled confidence through a share buyback program of up to €2.6 billion, running until July 31. Additionally, SAP continues to deepen its cloud infrastructure partnerships, with hyperscalers like AWS and Microsoft Azure vying to handle memory-intensive HANA workloads — AWS now offers instances with up to 34 terabytes of RAM, Azure matching with similar certified clusters. In the Middle East, the ALSAYER Group recently launched a five-year S/4HANA transformation program under the iVolution initiative, working with SAP Middle East and partner Proaxia to drive operational excellence and data-driven decision-making.
The quiet period prevents management from commenting before the call, but the earnings release on Thursday is expected to address whether the Prior Labs acquisition has already begun to feed into SAP’s broader AI strategy. Whether these efforts can stabilize the stock after such a punishing year-to-date decline will depend largely on whether SAP can convince the market that its billion-euro bet on tabular AI will translate into profitable growth — and that the broader software spending environment is not turning as sour as IBM’s warning suggests.
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