SAP’s €1 Billion AI Bet: Can Two Acquisitions and a Conference Reverse a 45% Rout?

SAP acquires Prior Labs and Dremio in 24 hours, investing €1B in AI, as shares drop 45% and RSI signals overbought. Sapphire conference key for investor confidence.

The numbers tell a brutal story. SAP’s share price has shed nearly 45% over the past twelve months, sliding from a 52-week high of €271.60 to trade around €149.54. The relative strength index sits at 75.7, flashing overbought after a recent bounce. Yet beneath that surface of distress, the company is quietly assembling the most aggressive AI strategy in its history — and it’s spending heavily to prove the market wrong.

A Double Acquisition in 24 Hours

On May 4, SAP signed a binding agreement to acquire Prior Labs, a Freiburg-based startup specializing in Tabular Foundation Models — AI systems trained specifically to analyze structured data in spreadsheets and databases. That deal came within a day of announcing plans to buy Dremio, a US data-lakehouse platform. The purchase prices for both transactions remain undisclosed, and the Prior Labs deal is still subject to regulatory approvals.

What makes Prior Labs unusual is its speed. Founded by Frank Hutter, Noah Hollmann and Sauraj Gambhir, the startup counts Meta’s AI chief Yann LeCun and Max Planck director Bernhard Schölkopf among its collaborators. Its open-source tool TabPFN has racked up over three million downloads. The acquisition comes less than 15 months after Prior Labs’ first and only funding round — a timeline that Balderton partner James Wise called remarkably fast for a European tech company.

SAP plans to invest more than €1 billion over four years to turn Prior Labs into what it calls a “frontier AI lab” for structured corporate data. The unit will operate independently to preserve its research velocity, while feeding into SAP AI Core, the Business Data Cloud and the Joule AI assistant. The Dremio acquisition serves a complementary purpose: integrating SAP and non-SAP data so that AI agents can draw on a broader data foundation.

The Market’s Structural Fear

The stock’s collapse reflects something deeper than a bad quarter. Investors worry that generative AI will eventually displace traditional ERP software — and they are pricing that risk into SAP shares even as the company pushes its own AI agenda. The first quarter of 2026 offered little reassurance on the sentiment front. Cloud revenue rose 19% to nearly €6 billion (27% currency-adjusted), and the cloud backlog hit €21.9 billion, up 25%. But a €408 million legal settlement with Teradata weighed on the Q1 result, even though management reaffirmed its full-year guidance of €25.8 billion to €26.2 billion in cloud revenue.

At roughly €147, the stock sits just 6% above its 52-week low of €139.12. The 200-day moving average of nearly €200 is more than a quarter above current levels — a technical reminder of how far the shares have fallen.

Sapphire as a Pivot Point

SAP’s annual developer conference, Sapphire, runs from May 11 to 21, with the main event in Orlando from May 11 to 13 and a European leg from May 19 to 21. Barclays analyst Sven Merkt sees the conference as a critical opportunity for SAP to convince investors that its AI strategy is working. The company has already signaled a shift in its pricing model: future fees will be tied to AI usage rather than user numbers. Prior Labs represents the most expensive piece of that pivot so far.

The analyst community remains deeply divided. Goldman Sachs has a Buy rating with a €230 price target. Barclays is Overweight at €220. JPMorgan is Neutral at €175. The DZ Bank recommends selling, with a target of €130.

Every Stage Counts

Alongside the main shareholder meeting, SAP is presenting at the Gartner Supply Chain Symposium in Orlando, demonstrating how AI agents can accelerate decisions in planning, manufacturing and logistics. The timing is deliberate. The company is using every available platform to reframe the narrative — from a story about disruption risk to one about growth through AI. Whether that message lands will be decided in Orlando, and in the weeks that follow.