SAP’s API Crackdown Casts a Shadow Over a Strong Quarter and a Dividend Hike

SAP's shares dip below key moving average as a new API policy restricting external AI tools threatens its cloud growth narrative, despite strong Q1 earnings and a dividend hike.

SAP is heading into one of its most consequential weeks of the year, but the mood among investors is far from celebratory. The software giant’s shares have slipped below their 20-day moving average, closing at roughly €144, as a simmering dispute over application programming interfaces threatens to undermine the very cloud and AI strategy that has been driving its recent growth.

The tension comes to a head on Tuesday, when the company holds its virtual annual general meeting. On the surface, the agenda looks routine: shareholders will vote on a proposed dividend of €2.50 per share — a more than 6% increase from the prior year, yielding about 1.7% at last week’s closing price. They will also be asked to approve the appointment of René Obermann to the supervisory board, widely seen as the heir apparent to the chairmanship in 2027.

But beneath the procedural calm, a deeper conflict is brewing. Late last month, SAP published a new API policy that has rattled its core customer base. The directive effectively bars the use of SAP’s interfaces for external generative AI systems unless explicitly approved. The company cites technical stability as the rationale, arguing that external cloud workloads are placing increasing strain on its infrastructure.

The Deutschsprachige SAP-Anwendergruppe, or DSAG, has reacted with alarm. Chairman Jens Hungershausen warns the policy creates “massive uncertainty” and risks freezing customer AI innovation in its tracks. The rules create a clear asymmetry: third-party tools like Microsoft Copilot and Salesforce Einstein face strict limitations, while SAP’s own AI products are exempt.

For now, existing customer integrations are not affected — the new rules primarily target new clients. But how SAP will handle contract renewals remains an open question, and the debate is hitting the company at a sensitive moment. A weaker-than-expected cloud growth rate in the second quarter has already weighed on sentiment.

The cloud business, however, remains the engine of SAP’s financial performance. In the first quarter, currency-adjusted cloud revenue surged 27% to nearly €6 billion, beating consensus estimates. The backlog of contracted future cloud revenue — a key forward-looking metric — now stands at close to €22 billion. Adjusted operating profit climbed 24% to €2.87 billion, pushing the operating margin to a clean 30%.

That strong operational base underpins the dividend proposal and the company’s full-year guidance. Management is sticking to its forecast for cloud revenue of up to €26.2 billion and an operating result of up to €12.3 billion for fiscal 2026.

Yet the API controversy threatens to complicate the narrative around SAP’s AI ambitions. The company has positioned its Joule assistant as a central tool for monetizing cloud services, pushing back against market fears of a so-called “SaaS apocalypse” — the idea that generative AI agents could render traditional software models obsolete. Executives insist that AI is already embedded in the majority of new cloud deals.

The debate will inevitably spill into the open at SAP’s Sapphire conference in Orlando from May 11 to 13, where the product roadmap is set to take center stage. Investor Relations has scheduled presentations and Q&A sessions with analysts, and the API dispute is expected to dominate discussions. Shareholders are demanding clarity on new cost structures and the long-term innovation trajectory of the software group.

The week’s calendar is tightly packed for investors. After Tuesday’s AGM, Wednesday marks the ex-dividend trading day, with the corresponding price adjustment. The payout is scheduled for May 8. Shortly after, attention shifts to Orlando, where the financial analyst conference will also feature details on the integration of recently acquired Reltio Inc and the medium-term strategy.

For now, SAP finds itself in an uncomfortable position: delivering solid numbers and a rising dividend, while facing a customer revolt that could slow the very AI adoption it needs to sustain its growth story.