SAP’s Pre-Earnings Slide Intensifies as Investors Wait for Clarity on Cloud Growth and AI Margins
Published on 07/22/2026 at 18:33 | Redaktion boerse-global.de
SAP’s stock is under mounting pressure as the software giant prepares to release its second-quarter and first-half results after the US market close on Thursday, July 23, at 10:05 p.m. Central European Time. The shares slipped 2.79 percent on Wednesday to €132.40, having closed at €136.20 the previous session, leaving them just 1.22 percent above the 52-week low of €130.80 set on June 25. Since hitting an all-time high of €260.80 last July, the stock has lost roughly half its value, reflecting a profound shift in investor sentiment that has hardened over recent weeks.
Analysts are forecasting cloud revenue of approximately €6.26 billion for the quarter, representing 22 percent year-on-year growth, with total revenue expected to reach €9.85 billion. Those headline numbers, however, may take a back seat to the tone management strikes during the analyst conference scheduled for 11:00 p.m., where three topics are expected to dominate: margins, the cloud order backlog, and investment priorities for the second half of the year.
Strategic Moves Ahead of the Numbers
SAP used the days leading up to the earnings release to make two significant strategic adjustments. On July 20, the company completed its acquisition of Freiburg-based AI startup Prior Labs after receiving antitrust clearance. The startup specializes in tabular foundation models — AI systems designed for the structured enterprise data that sits at the heart of SAP’s core ERP business.
The following day, the founding Tschira family announced a restructuring of its voting rights through new pooling agreements structured as a multi-parent arrangement. Udo Tschira now holds 4.19 percent of voting rights, while Harald Tschira holds 4.22 percent, according to a filing under Section 40 of the German Securities Trading Act. The move consolidates the family’s influence ahead of what could be a pivotal period for the company.
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Investors are also watching July 31, when the current €2.6 billion share buyback program for 2025/2026 is scheduled to expire. Whether SAP will announce a follow-on program — and on what terms — is expected to come up during the analyst call.
Analyst Views Diverge Sharply
The range of analyst opinions underscores the uncertainty surrounding the stock. UBS analyst Michael Briest cut his price target sharply from €205 to €164 on July 19, while maintaining a Buy rating. His concern centers on the complexity of monetizing AI agents within SAP’s core ERP business, suggesting the market has yet to price in the revenue contribution from new AI features.
At the other end of the spectrum, Morningstar analyst Rob Hales reaffirmed his fair value estimate of €265 on July 17, a level that implies substantial upside from current trading. The wide gap between these two views reflects the difficulty of forecasting how quickly SAP’s AI investments will translate into measurable revenue and margin improvement.
The Bull Case: Cost Discipline and AI Efficiency
Supporting the optimistic scenario is SAP’s operational performance in the first quarter of 2026, when the company comfortably beat its own expectations before seasonal normalization set in. Bloomberg reported during the quarter that SAP is throttling new hires outside its AI division and curbing business travel, redirecting freed-up resources into artificial intelligence investments. If that cost discipline shows through in a stable or improved operating margin, and if management delivers convincing commentary on AI monetization, the stock could stage a recovery toward its 50-day moving average of €144.50. The relative strength index currently sits at 44.0, suggesting the shares are neither overbought nor oversold, leaving technical room for a bounce.
The Bear Case: Cyclical Headwinds and Slowing Cloud Momentum
The risks are equally real. SAP’s customer base is heavily weighted toward manufacturing, a sector acutely sensitive to the conflict in Iran and rising energy costs. If management reports meaningfully longer sales cycles, doubts about the 2026 full-year guidance would deepen, putting the stock under renewed pressure.
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Cloud revenue growth has also benefited from a series of one-off effects in prior quarters, and those tailwinds are expected to fade in Q2, potentially slowing the headline growth rate. The stock already trades 22.31 percent below its 200-day moving average, a bearish technical signal, while the annualized 30-day volatility of 34.26 percent points to a nervous trading environment.
SAP has also been working the regulatory side, announcing more flexible maintenance and support terms for on-premise customers following constructive discussions with the European Commission. The aim is to ease the transition to cloud offerings without alienating legacy clients.
What to Watch on Thursday Evening
For shareholders, Thursday night brings together several threads: the integration of Prior Labs, the conclusion of the buyback program, and above all, the question of whether cloud growth can hit the 22 percent mark. If SAP reaffirms its annual guidance and demonstrates concrete progress in monetizing business AI, the stock may begin to stabilize above its 52-week low. If instead the commentary points to margin pressure, slower deal cycles, or a weakening cloud pipeline, the shares could test the €130.80 floor once again. The earnings call will determine whether the recent slide continues or whether the fundamentals finally begin to reassert themselves.
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