SAP’s AI Offensive Meets a Skeptical Market as Share Price Languishes

SAP's aggressive AI push with Dremio and Prior Labs acquisitions fails to reverse stock decline, as cloud growth slows and legal costs weigh on investor sentiment.

The disconnect between SAP’s strategic ambitions and its stock market performance has rarely been starker. The Walldorf-based software giant is pushing aggressively into artificial intelligence, announcing two acquisitions in quick succession and unveiling new supply-chain automation tools. Yet its shares continue to trade near 52-week lows, leaving investors to wonder whether the company’s narrative shift can regain traction.

At roughly €148, SAP’s stock has shed nearly 27% since the start of the year and sits more than 45% below its 52-week peak of around €271. The 200-day moving average of about €200 stands a full quarter above current levels — a technical signal that underscores just how far the equity has fallen.

Back-to-Back Acquisitions Bolster AI Credentials

SAP moved to shore up its AI strategy on two fronts ahead of this week’s annual general meeting. The company announced the acquisition of Dremio, a data-lakehouse platform designed to link SAP and third-party data in real time. The deal, which remains subject to regulatory approval, is expected to close in the third quarter of 2026. Dremio’s technology is intended to accelerate agentic AI applications by providing a unified data foundation.

Separately, SAP has signed an agreement to acquire Prior Labs, a specialist in tabular foundation models. The company plans to invest more than €1 billion over four years to develop Prior Labs into a dedicated AI laboratory focused on structured enterprise data.

The message from management is clear: AI is not a threat to SAP’s core enterprise resource planning business, but rather an extension of it. The acquisitions aim to demonstrate that the company can harness the technology to deepen its competitive moat rather than see it eroded.

Cloud Growth Slows, Legal Costs Weigh

Operationally, the first quarter provided a solid — if uneven — foundation. Cloud revenue climbed 19% to nearly €6 billion, or 27% on a currency-adjusted basis. The cloud order backlog rose 20% to €21.9 billion. But the board has cautioned that the second quarter will see a deceleration, partly because one-off effects flattered the prior period.

A legal dispute with Teradata added €408 million in costs to the first-quarter result, weighing on sentiment even as management reaffirmed its full-year guidance for cloud revenue of €25.8 billion to €26.2 billion.

The deeper concern among investors is structural. Many fear that generative AI could eventually displace traditional ERP software altogether, a risk that currently overshadows SAP’s own AI ambitions in the minds of market participants.

Sapphire Conference Looms as a Pivotal Moment

All eyes are now on SAP’s Sapphire conference, which runs from 11 to 13 May in Orlando, with a European edition following from 19 to 21 May. The event is seen as a critical opportunity for management to reset the narrative. SAP plans to host dedicated investor presentations and an analyst Q&A session, offering concrete details on its AI roadmap.

Analyst sentiment is divided. Goldman Sachs has trimmed its price target to €230 but maintains a buy rating. Barclays keeps an “overweight” stance with a €220 target, while JPMorgan is neutral at €175. The DZ Bank stands alone with a sell recommendation and a €130 price target, implying further downside from current levels.

Barclays analyst Sven Merkt views the conference as a chance to convince investors that SAP’s AI strategy is credible. The company is not leaving anything to chance: alongside the main event, it is demonstrating autonomous supply-chain capabilities at the Gartner Supply Chain Symposium in Orlando, showcasing AI agents that manage planning, manufacturing and logistics. A live feed from SAP’s own factory will illustrate the technology in action, and a joint presentation with Procter & Gamble will highlight connected planning centers.

SAP’s AI assistant, Joule, now operates across 35 of the company’s solutions. The challenge for management is to translate that breadth into investor conviction — and to close the yawning gap between a stock trading near €148 and a business generating nearly €6 billion in quarterly cloud revenue.