SAP’s Cloud and AI Engine Revs Up with Reltio, Dremio, and Microsoft—but the Stock Still Idles

Despite 27% cloud revenue growth and strategic acquisitions (Reltio, Dremio) plus Microsoft partnership, SAP shares have dropped 29% as cautious Q2 outlook spooks investors.

SAP has been aggressively adding pieces to its cloud and artificial intelligence puzzle, but on the trading floor the narrative remains stubbornly negative. The German software group’s shares have lost nearly 29% since January, closing at €144.02 on Monday, as investors question the growth trajectory despite a string of upbeat operational numbers and a flurry of strategic moves.

Reltio Integration Complete, Dremio Next in Line

On May 7, SAP wrapped up its acquisition of Reltio, a master-data-management specialist whose cloud-native platform cleanses and links corporate data from both SAP and non-SAP systems. The deal, for which no purchase price was disclosed, brings in an annual recurring revenue of $185 million and a 40% booking growth rate. Reltio’s entity resolution and data graph capabilities are designed to fix a common AI pitfall: messy data that derails model performance.

The acquisition is part of a broader data pipeline strategy. SAP is also buying Dremio, a data lakehouse company, in a transaction expected to close in the third quarter of 2026, pending regulatory approvals. Dremio will help unify data sources through an open catalog built on Apache Polaris and the Apache Iceberg REST Catalog API. Together with Prior Labs, which supplies AI models, SAP is assembling a full stack to make its Business Data Cloud the go-to platform for enterprise AI.

Microsoft Alliance Doubles Down on Migration and AI

Alongside the acquisitions, SAP deepened its existing partnership with Microsoft. Announced at the Sapphire conference, the expanded alliance aims to more than double the number of customers moving legacy ERP systems to Azure by the end of 2026. A joint team of product engineers will be deployed to accelerate those migrations. The two companies are also building a shared AI platform designed to transform enterprise data into intelligent workflows directly within the cloud environment.

The Microsoft tie-up reinforces SAP’s dual focus: migrating on-premise customers to the cloud and embedding AI into those new deployments. The message from Walldorf is clear—scaling the installed base and monetizing AI are now inseparable.

Cloud Revenue Surges, but Caution Flags Raised

The first quarter delivered solid underlying numbers. Cloud revenue climbed 27% on a currency-adjusted basis to just under €6 billion, while total revenue reached €9.6 billion. The operating margin came in at 30%. The cloud backlog, a forward-looking indicator of contracted revenue, pushed past €21 billion.

Nevertheless, SAP management was careful to temper expectations for the second quarter, noting that Q1 growth benefited from several one-off effects. That warning has spooked the market, particularly given the stock’s already weak technical position. The shares are trading 6.3% below their 50-day moving average and a steep 27% below the 200-day average, leaving them closer to their 52-week low than any recent high.

Sapphire Analyst Conference Looms as Key Test

The market will get its next chance to reassess the story on May 13, when SAP holds its financial analyst conference during the Sapphire event in Orlando. The agenda includes board presentations and a Q&A session that could clarify how the company intends to convert its infrastructure investments into sustained cloud momentum.

For now, the management has reiterated its full-year cloud revenue target of between €25.8 billion and €26.2 billion at constant currencies. The credibility of that growth path—and whether the three-pronged push of Reltio, Dremio, and the Microsoft alliance can reignite the stock—will be the central question for analysts and investors alike.