SAP Juggles IBM Fallout and AI Study: Can the Software Giant Reboot Its Narrative?

SAP stock drops after IBM's weak quarterly results, but a new Oxford Economics study commissioned by SAP shows AI project ROI rising to 21%, with governance challenges remaining.

SAP shares slid 5.6 percent to €136.38 on Wednesday, caught in the undertow of IBM’s brutal quarterly miss, while a freshly published study on artificial intelligence returns offers a competing storyline for the German software giant. The DAX-listed stock now sits just 4.27 percent above its 52-week low of €130.80, a level set on June 25, and has shed 48.08 percent of its value over the past twelve months.

IBM’s troubles were the immediate trigger. The US technology bellwether reported revenue of $17.2 billion, falling short of the consensus estimate of $17.86 billion. Chief Executive Arvind Krishna attributed the gap to a shift in customer spending: in the final weeks of June, clients accelerated purchases of servers, storage and memory to hedge against expected price increases, squeezing IBM’s software revenue. The stock cratered almost 19 percent in pre-market trading, and the shockwaves rippled across European software names. Nemetschek lost more than four percent, while Capgemini slid five percent in Paris.

For SAP, the timing could hardly be worse. The company is already the weakest performer in the DAX, and the IBM episode has revived investor fears that corporate budgets are pivoting away from classic enterprise software toward hardware and infrastructure. Analysts describe the sector sentiment as fragile, weighed down for weeks by worries that AI agents will eventually automate business processes and undermine traditional ERP models. Oracle added to the pressure recently after a credit rating downgrade linked to heavy AI-related debt.

Yet a counter-narrative arrived on July 15 in the form of an Oxford Economics study commissioned by SAP. The research, which surveyed global executives, found that the average return on investment from AI projects has climbed to 21 percent, up from 16 percent a year earlier. The concept of “Agentic AI” — autonomous agents that independently handle tasks — is at the centre of the story. The study projects a jump in ROI to as much as $17.6 million per company over the next two years. SAP plans to embed more than 50 such agents into its cloud software, a move that could strengthen its value proposition.

The catch is governance. While 83 percent of respondents rated the potential of Agentic AI as high or transformative, only 3 percent say their organisations are fully prepared to deploy it. Just 12 percent have effective AI governance structures in place. A full 73 percent of companies struggle with incomplete or poor-quality data, and 79 percent have already experienced delays or faulty results that required a do-over. Without cleaner data and stronger controls, the promised productivity gains — such as slashing monthly financial report generation from 12 hours to two or three — may remain confined to pilot projects.

Cybersecurity adds another layer of risk. SAP’s most recent Patch Tuesday delivered 16 security updates, including critical vulnerabilities in NetWeaver and Commerce Cloud with CVSS scores as high as 9.9. Enterprises may be wary of integrating autonomous agents that could widen their attack surface, especially after incidents like the “Bun-Stealer” attack on SAP packages. Meanwhile, 69 percent of companies report employees using unauthorised “shadow AI” — a trend that, if left unchecked, could slow official adoption of SAP’s agent-driven roadmap.

The technical picture offers little comfort. The 50-day moving average sits at €145.06, and the 200-day average at €177.27 — both well above the current price. The relative strength index is at 43.6, neutral but not oversold. A break below €133 could open the door to a slide toward €120, while any bounce would need to clear the 50-day line to suggest a potential bottom.

The next major catalyst is SAP’s second-quarter and first-half earnings report, scheduled for July 23 at 22:05 CEST. The company is currently in a quiet period, prohibiting any commentary on results. Analysts still expect growth, but the market will be looking beyond the headline numbers to management’s outlook and evidence that the cloud and AI strategy is gaining traction. Until then, the stock remains at the mercy of sector-wide sentiment — pulled between the IBM-driven fear of a budget rotation and the tantalising but unproven promise of agentic AI returns.