SAP's €1 Billion AI Splurge and Analyst Polarization Precede a Pivotal Quarterly Report

SAP shares trade near 52-week low as analysts split on AI-driven revenue; UBS slashes target to €164, Bernstein sees €276. Stock down 33% YTD.

The gap between what some analysts think SAP is worth and what they expect to pay for the stock has rarely been wider. Bernstein sees the shares climbing to €276, while UBS slashed its target to €164 just days ago – a spread of more than €100 that underscores just how uncertain the market has become about the software giant’s ability to turn its artificial-intelligence ambitions into tangible revenue growth.

That uncertainty stems in part from the very deals SAP is touting. On July 17, the company closed its acquisition of Freiburg-based AI specialist Prior Labs, a transaction valued at over €1.0 billion – more than $500 million of which was paid in cash. The startup, which develops so-called tabular foundation models trained on structured spreadsheet-style data, will operate as an independent brand inside SAP. Over the next four years, the Walldorf group plans to pump more than a billion euros into Prior Labs’ research team.

The Prior Labs purchase is the latest in a string of bolt-on acquisitions aimed at building out an end-to-end AI value chain for enterprise data. Already in 2026, SAP completed the takeovers of data processing specialist Dremio and data provider Reltio. The strategy, first laid out at the annual press conference in January, is to clean up and unify corporate data from both SAP and third-party systems so that generative AI can actually deliver value inside ERP landscapes. Each deal targets a different layer: Dremio for data preparation, Reltio for data unification, Prior Labs for the AI models themselves.

Yet for all the spending, the stock has been heading in the opposite direction. On Friday, SAP shares closed at €138.50, a decline of 1.81% in a single session. That leaves the company down 33.53% year to date. The current price is just 5.89% above the 52-week low of €130.80 hit at the end of June, meaning the shares are trading closer to the bottom of the past year’s range than to any previous high. Market capitalisation stands at roughly €159.64 billion.

External headwinds have done little to help. Mid-July saw disappointing preliminary quarterly numbers from US rival IBM, which weighed on the entire European software sector. Investors fretted that corporate IT budgets are shifting toward AI hardware at the expense of business software – a rotation that would hit SAP directly. The macro jitters added to concerns that have dogged the stock since the start of the year.

Among analysts, the battle lines are drawn. UBS’s Michael Briest cut his price target from €205 to €164 on July 13, citing the high complexity of embedding AI into existing ERP systems. He maintained a buy rating despite the reduction. On the other end of the spectrum, Bernstein on July 16 reiterated a target of €276, pointing to the upcoming quarterly figures as a potential catalyst. The divergence reflects a broader debate: will SAP’s cloud momentum hold, and can the billion-euro AI bet start to show results?

The next major test arrives on July 23, when SAP publishes its second-quarter and first-half results after the market close. The company entered a quiet period on July 16, so no operational commentary is available until then. Analysts on average expect sales of €9.85 billion and earnings per share of €1.76. The numbers will also be the first to include contributions from the string of AI-driven acquisitions, though concrete financial impacts are unlikely to be broken out immediately.

Fundamentally, the first quarter offered grounds for optimism: cloud revenue rose 27%, and the currency-adjusted current cloud backlog expanded by 25%. Those figures, presented on April 22, underpin the more bullish analyst estimates. The question is whether that pace can be sustained and whether the market will begin to reward the hefty investment in Prior Labs, Dremio, and Reltio – or continue to punish the stock for the complexity and risk that those deals entail.