SAP Doubles Down on AI With Back-to-Back Acquisitions Ahead of Shareholder Showdown

SAP acquires Dremio and Prior Labs for AI push, reports Q1 cloud revenue up 27% to €5.96B, as stock trades 46% below peak ahead of AGM vote.

The Walldorf-based software giant is heading into its virtual annual general meeting on Tuesday with more than just a dividend hike on the agenda. SAP has announced two acquisitions in quick succession — Dremio and Prior Labs — signaling an aggressive push to embed artificial intelligence deeper into its enterprise software stack.

A €1 Billion Bet on Tabular AI

The larger of the two bets is Prior Labs, a research outfit specializing in tabular foundation models. Unlike the large language models that dominate headlines, these systems are trained on structured data — think spreadsheets and databases — to predict business outcomes such as payment defaults or customer churn. SAP plans to invest over €1 billion in Prior Labs over the next four years, with the aim of building a European AI research lab of global stature. The unit will operate independently within SAP, feeding its technology into SAP AI Core and the SAP Business Data Cloud.

The second deal, announced on May 4, 2026, brings in Dremio, a data-lakehouse platform that promises to unify SAP and non-SAP data on a single open platform. SAP Chief Technology Officer Philipp Herzig framed the acquisition as a solution to a fundamental bottleneck: corporate AI initiatives often stumble not on algorithms but on data readiness. Dremio is expected to lay the groundwork for what SAP calls “agentic AI” — autonomous systems that can act on data without human intervention.

Financial terms for both transactions remain undisclosed. The deals are subject to regulatory approval, with closings expected in the third quarter of 2026, though the Prior Labs acquisition could close earlier.

Cloud Momentum Provides the Foundation

The acquisition spree is backed by a solid first quarter. SAP reported total revenue of €9.56 billion for Q1 2026, with cloud revenue climbing 27 percent on a currency-adjusted basis to €5.96 billion. Earnings per share came in at €1.66, slightly ahead of the analyst consensus of €1.64. The cloud backlog — a key indicator of future revenue — swelled to €21.93 billion, up 25 percent in constant currency.

That performance gives management breathing room to pursue an ambitious integration agenda, even as the stock trades well off its highs.

A Stock Under Pressure

SAP shares have had a rough 2026. At €147.14, the stock is roughly 46 percent below its 52-week peak of €271.60, with a year-to-date decline of about 27 percent. Monday’s modest gain of 2.7 percent, which lifted the stock to €148.26, felt more like a sigh of relief than a genuine turnaround.

Analyst opinions are sharply divided. The DZ Bank sees the stock at just €130 — below current levels — while Bernstein is far more bullish with a €273 target. UBS sits in the middle at €205. The unusually wide range reflects deep uncertainty over how successfully SAP can integrate its new acquisitions and monetize its AI strategy.

What Shareholders Will Vote On

At Tuesday’s virtual AGM, shareholders will vote on a proposed dividend of €2.50 per share for fiscal 2025, up from €2.35 the prior year. The ex-dividend date is May 6, with payment scheduled for May 8.

There is also a significant boardroom shakeup on the horizon. Four supervisory board members are stepping down, including Pekka Ala-Pietilä and Gerhard Oswald. René Obermann is set to be elected to the board, with an eye toward eventually taking the chair.

The management’s comments on the Dremio and Prior Labs integrations, as well as the full-year outlook, will be the key event for investors. With the stock nursing deep losses and the AI strategy now backed by two major deals, the AGM could set the tone for the next leg of the share price — for better or worse.