SAP's Austerity Drive Intensifies as Stock Sinks to New Low

SAP imposes hiring freeze, reactivates Spend Council due to AI cost blowout; shares hit 52-week low, down 33% YTD, as Cognite acquisition fails.

A leaked internal memo from SAP's board room has laid bare the scale of the cost-cutting push gripping Europe's largest software company, with nearly all hiring frozen and a much-watched oversight body revived to police spending. The measures, outlined in a 2 July 2026 communication, come as SAP's shares tumble to a fresh 52-week low, pressured by a painful combination of geopolitical jitters, a cooling AI hype cycle, and a failed acquisition bid that has underscored the company's struggle to secure key intellectual property.

The stock fell another 2.72% on Thursday to trade at €134.70, piercing the prior year-to-date nadir of €130.80 set in late June. On a weekly basis the decline now stands at 5.38%, while the one-month slide has reached 13.28%. Since the start of the year, shareholders have lost more than a third of their investment – the decline stands at 33.32% – and the current price sits a staggering 49.36% below the twelve-month peak of €266.00. Technical indicators offer little comfort: the relative strength index is neutral at 41.5, while the stock is clearly below both its 50-day moving average (€145.77) and its 200-day moving average (€179.14). The 30-day volatility reading of 45.69% underlines the persistent uncertainty.

The fresh austerity measures, which go well beyond routine belt-tightening, stem directly from cost overruns related to the company's pivot toward artificial intelligence. Finance chief Dominik Asam told staff in the memo that the operational expenses for running large language models – particularly the token consumption inside AI applications – had blown past internal budgets. In response, SAP has reactivated its "Spend Council," a cross-departmental committee that will now vet all procurement contracts and external service provider outlays. Non-essential business travel has been halted entirely; travel budgets now require explicit approval for client-facing meetings or AI-related projects. New hiring is confined almost exclusively to the AI division, while other departments face a blanket freeze.

Adding to the cloud of skepticism surrounding SAP's strategic direction is the collapse of a planned takeover of Cognite, an industrial AI specialist. The target company instead opted for a €3.1 billion all-cash offer from Schneider Electric at the end of June, a deal that market participants read as evidence that SAP is struggling to lock in both crucial talent and intellectual property in an increasingly competitive landscape. The cancellation of the Cognite bid compounds the negative sentiment already created by the hiring freeze and the broader sector headwinds, including geopolitical tensions in the Middle East that have depressed the entire DAX index and fresh regulatory uncertainty from the European Union's new AI Act.

All eyes are now on the quarterly results due after the US market close on 23 July, when SAP will release figures for both the second quarter and the first half. With the company currently in a quiet period, management is barred from commenting on the business. Analysts expect revenue of just under €10 billion and earnings per share of €1.76 – the first set of numbers that should reflect the financial impact of the cost clampdown. Of particular interest to investors is the cloud order backlog, which on a currency-adjusted basis expanded 25% in the most recent period. If SAP can confirm that growth rate on 23 July, it may offer the first tentative signal that the internal belt-tightening has not yet alienated customers or slowed the cloud transition – and provide the battered stock with a modicum of support.