SAP’s Cloud Earnings Test Arrives Amid EU Antitrust Progress and a €3.5B AI War Chest

SAP shares have fallen ~20% YTD, now at a critical 100-day moving average. The next weeks hinge on EU antitrust resolution, aggressive AI acquisitions, a €10B buyback, and Q2 earnings. Is this a buying opportunity or correction?

SAP has shed roughly a fifth of its market value since the start of the year, but the next few weeks could determine whether the slide is a buying opportunity or the beginning of a longer correction. A trio of catalysts — a potentially benign end to an EU antitrust probe, the continued support of a multi-billion-euro share buyback, and a crucial second-quarter earnings report on 23 July — are converging to test the narrative that Walldorf’s aggressive pivot to artificial intelligence will eventually be rewarded.

The stock closed the week at €160.86, a 0.54% decline on the day but still up 2.85% over the previous seven days. That puts the shares directly on the 100-day moving average, a level technicians see as a make-or-break threshold for a sustainable recovery. Above that line, the path toward €191.40 (the 200-day average) opens up; below it, the 50-day moving average becomes the next support. The gap to the 52-week high of €271 remains a painful 40% — a measure of how far sentiment has soured.

Brussels Clouds Could Lift

The most immediate regulatory overhang is the European Commission’s investigation into whether SAP restricted competition in maintenance and support services for on-premise ERP software within the European Economic Area. In theory, a fine of up to 10% of annual revenue is possible. But the tone has shifted in SAP’s favour. The Commission has launched a market test on commitments the company has offered, including greater customer choice in service providers, more flexibility on software licences, and the removal of certain fees. If no substantial objections emerge, the case could be closed without a penalty. SAP has stated it does not expect any material financial impact from the eventual outcome.

A Debt-Fuelled Acceleration in AI

While the legal front shows signs of clearing, the operational strategy is being pushed forward at breakneck speed. Chief Executive Christian Klein is reshaping SAP into what the company calls an “Autonomous Enterprise”, powered by its Business AI platform. To fund the transformation, SAP issued a €3.5 billion eurobond at the end of May. Proceeds are being used to refinance the acquisitions of data manager Reltio (completed) and query engine specialist Dremio (pending closure in the third quarter, subject to regulatory approvals). A third target, Prior Labs, is also on the shopping list, bringing specialised tabular data models into SAP’s ecosystem. The message from management is unambiguous: the pace of dealmaking in cloud and AI infrastructure will not slow.

A €100 million partner fund and the rollout of tools such as Joule Studio and Joule Work are designed to broaden the ecosystem. CTO Philipp Herzig will provide a deeper look at the strategy during a fireside chat on 10 June, ahead of the Q2 numbers.

Buyback Adds a Floor

Investors also have the support of a hefty capital return programme. In January SAP announced a new buyback of up to €10 billion, to run until 31 December 2027. The current tranche, running from 5 February to no later than 27 July 2026, allows for the repurchase of shares worth up to €2.6 billion. That creates a steady source of demand through the summer and reinforces confidence that management sees the stock as undervalued.

The Cloud Test That Matters

Operationally, all eyes are on the second-quarter results due after the US market close on 23 July. The first quarter set a high bar: cloud order backlog rose 20% to €21.9 billion, cloud revenue climbed 19% to roughly €6.0 billion, and the IFRS operating profit jumped 17% to €2.7 billion. On a non-IFRS basis, operating profit hit €2.9 billion, a 24% increase.

Management, however, warned that the first quarter benefited from non-recurring effects and that growth would decelerate in Q2. The market will scrutinise whether the slowdown is merely a digestible pause or a sign that the cloud momentum is fading. For the full year, SAP targets cloud revenue of €25.8 billion to €26.2 billion, cloud-plus-software revenue of €36.3 billion to €36.8 billion, non-IFRS operating profit of €11.9 billion to €12.3 billion, and free cash flow of around €10 billion.

The longer-term story hinges on how quickly SAP can convert its AI investments into billable products. Institutional investors are demanding tangible proof that the cloud-based AI features — designed to automate business processes autonomously rather than just assist — can be monetised. If the Q2 numbers and the accompanying commentary provide that evidence, the current discount to last year’s highs could spark a fundamental revaluation. If not, the stock may remain stuck in its consolidation zone, waiting for the next catalyst.