SAP’s AI Pivot for Legacy Clients Raises Questions as Stock Sheds a Quarter of Its Value

SAP pivots from using AI as cloud leverage, now offering tools to ECC users. Stock near €150, but Barclays sees 45% upside on agentic AI investments.

SAP is rewriting the rules of its cloud-first strategy, opening its artificial intelligence toolkit to customers still running the older ECC on-premise platform. The move, reported by Bloomberg, signals a tactical retreat from the previous policy of using exclusive AI features as leverage to push clients into cloud subscriptions. With startups like Anthropic offering automation tools that can bypass traditional enterprise software altogether, Chief Executive Christian Klein appears to be prioritizing market share retention over migration acceleration.

The shift comes as SAP’s stock trades near €150, down roughly 26% since the start of the year — a decline that has left the shares languishing well below their long-term moving average. The weakness persists despite a strong first quarter in which cloud revenue grew 27% on a currency-adjusted basis and the order backlog swelled to nearly €22 billion. A costly legal dispute weighed on earnings, but management has held firm on its full-year guidance.

Barclays analyst Sven Merkt sees a different story beneath the surface. He reaffirmed an “Overweight” rating with a €220 price target, implying more than 45% upside from current levels. Merkt pointed to SAP’s recent acquisitions of Dremio and Prior Labs as key moves that strengthen the technological foundation for agentic AI — software that can combine internal and external data in real time for analytical processes. The Dremio deal, a data-lakehouse platform, is expected to close in the third quarter of 2026; financial terms were not disclosed.

These investments will take years to flow through to the bottom line, but Barclays argues they underscore SAP’s ambition to dominate autonomous enterprise software. The company demonstrated related logistics solutions at the Gartner Supply Chain Symposium this week, while its AI assistant Joule has now been embedded in dozens of SAP products.

The near-term outlook is more measured. After a strong start to the year, management expects a slight deceleration in cloud growth during the second quarter, as positive one-off effects from the first quarter fade. For the full year, SAP still targets free cash flow of around €10 billion. Shareholders at today’s annual general meeting are also set to vote on a proposed dividend of €2.50 per share.

Chart watchers see a glimmer of hope: the stock has just crossed above its 20-day moving average, a short-term bullish signal. But with a relative strength index near 76 — deep in overbought territory — the risk of profit-taking is real. The next major catalyst comes next week, when SAP hosts its Sapphire sales conference in Orlando from May 11 to 13. The board is expected to flesh out the revised product roadmap for on-premise customers, offering the clearest picture yet of how the company plans to balance legacy support with its cloud ambitions.