SAP’s €1 Billion AI Lab Bet Comes With a Side of Dividends and a Bruised Share Price

SAP snaps up two AI firms in one day, invests €1B in Prior Labs, and raises dividend 6.4% as stock lags amid costly AI transformation.

The software giant has been on a dealmaking tear, snapping up two companies in a single day while simultaneously rewarding shareholders with a bigger dividend. But the market’s response has been less than enthusiastic, with the stock trading well off its highs as investors weigh the cost of an ambitious AI transformation.

A German AI Lab Gets a Nine-Figure Backing

SAP’s acquisition of Prior Labs, a Freiburg-based specialist in tabular foundation models, represents the centrepiece of its AI strategy. The startup’s flagship model, TabPFN, has already clocked up over three million downloads, and SAP plans to pump more than €1 billion into turning it into a leading AI research laboratory over the next four years. The purchase price is understood to be in the mid-hundreds of millions of euros, with over $500 million in cash going to the founders. Crucially, Prior Labs will continue to operate as an independent unit, preserving the entrepreneurial culture that produced its breakthrough technology.

Tabular foundation models are a niche but vital piece of the puzzle — they are designed to handle structured business data such as payment histories, supply chain risks and financial forecasts, rather than the unstructured text that dominates consumer AI. For a company like SAP, whose core business revolves around enterprise resource planning, that focus is a natural fit.

Data Architecture Gets a US Upgrade

Alongside the German acquisition, SAP is buying Dremio, a US data platform provider. The plan is to transform the SAP Business Data Cloud into an Apache Iceberg-native enterprise lakehouse, a move that promises to unify SAP and non-SAP data for real-time analytics and AI applications. Data fragmentation has long been cited as one of the biggest barriers to AI adoption in large organisations, and Dremio’s technology is designed to tear down those silos.

Both transactions are expected to close in the third quarter of 2026. On the API front, SAP is taking a controlled approach, allowing only so-called “SAP-endorsed architectures” — including Nvidia’s NemoClaw — to access its systems, ensuring the company retains governance and monetisation control.

Healthcare and Governance Moves

The dealmaking extends beyond core AI infrastructure. SAP and Fresenius are jointly investing in Avelios Medical, a Munich-based developer of AI-powered hospital information systems. The medium-term investment volume is also in the mid-hundreds of millions, with the goal of building an open digital health ecosystem for Germany and Europe.

Shareholders, meanwhile, had their say at the annual general meeting on 5 May. They voted through a dividend of €2.50 per share for the 2025 financial year, a 6.4 per cent increase on the prior year, bringing the total payout to around €2.74 billion. The stock went ex-dividend on 6 May, with payment due on 8 May.

In a separate vote, René Obermann was elected to the supervisory board with over 99 per cent approval. The former Deutsche Telekom chief is slated to take over the chairmanship from Pekka Ala-Pietilä in 2027, a move seen as strengthening the board’s technological oversight. Obermann will step down from his seat on Airbus’s board of directors in due course.

A Stock Under Pressure

Despite the flurry of positive news, SAP’s share price has been under pressure. The stock was trading at €147.60 on the day after the AGM, down around 1.6 per cent — though the dividend adjustment accounts for part of that decline. Year to date, the shares have lost roughly 27 per cent, and they remain well below their 200-day moving average of around €199.

CEO Christian Klein acknowledged on the AGM stage that the transformation into the AI era would require time and patience. The market, however, appears to be taking a wait-and-see approach. With the twin acquisitions not expected to close until the third quarter of next year, the next set of quarterly results will be the first real test of whether SAP’s billion-euro bet can translate into the growth that investors are demanding.