EU Investigation Piles Pressure on SAP Stock as Shares Touch 52-Week Low

SAP shares hit €132.26, down 34% YTD, but Berenberg sees 60% upside. Strong Q1 cloud revenue growth faces macro, regulatory, and migration challenges.

The gap between SAP's operational performance and its market valuation has rarely been wider. Shares of the German software giant slipped to a fresh 52-week low of €132.26 on Friday, bringing year-to-date losses to 34%. Yet analysts at Berenberg see a 60% upside from current levels, sticking to a €215 price target and a "Buy" rating. Analyst Nay Soe Naing calls the valuation historically cheap for the software sector, arguing the market is overlooking solid fundamentals.

Those fundamentals are hard to dismiss. In the first quarter of 2026, SAP’s cloud revenue surged 27% year-over-year. Total revenue came in at €9.56 billion, while operating profit climbed 24% to €2.9 billion. Earnings per share reached €1.66. Despite this, investors have rotated almost exclusively toward stocks with a clear AI or cybersecurity narrative — and SAP, in their view, does not yet fit that profile convincingly.

Macro headwinds and a cautious Fed

Monetary policy is adding to the pressure. At its June 17 meeting, the Federal Reserve held rates at 3.50%–3.75% under new chair Kevin Warsh. Nine of 18 committee members signaled possible rate hikes later this year, and Goldman Sachs has removed any expectation of cuts before 2027. For growth-oriented stocks, that raises the discount rate substantially. The UBS has also downgraded European IT stocks broadly, while Goldman Sachs cut its gross margin forecast for SAP, citing higher hardware costs in the second half.

Brussels opens a new front

A regulatory challenge now compounds the macro uncertainty. The European Commission has launched an investigation into SAP’s maintenance and service pricing practices, alleging that the company abused its dominant market position. If no settlement is reached, SAP could face a fine of up to 10% of its annual revenue — a potential multi-billion-euro penalty. That risk is weighing on sentiment, even as analysts point out that such fines are often negotiated down.

Migration troubles and cost relief

On the operational side, the slow pace of S/4HANA migrations remains a drag. Some market participants view the transition as too sluggish, fueling persistent selling pressure. There is a silver lining, however: the ceasefire in the Middle East and the US-Iran agreement have driven oil prices lower, which UBS analyst Michael Briest argues should reduce operating costs for global companies like SAP. UBS maintains a €205 price target on the stock.

The Q2 test

All eyes are now on July 23, when SAP releases its half-year results. The market will scrutinize whether recent acquisitions — Reltio and Prior Labs — are already accelerating cloud order growth. Of equal importance is whether the cloud gross margin and order backlog can sustain the momentum from the first quarter. If the numbers demonstrate that SAP’s AI strategy is commercially viable, the stock could begin to close the nearly 50% gap from its year-to-date high. For now, the €215 target from Berenberg remains a bet on patience — one that the market is in no hurry to validate.