SAP's Healthcare Bet and AI Pivot Fail to Lift a Stock Stuck 45% Below Its Peak

SAP and Fresenius back Avelios Medical for cloud-native hospital IT, but a 27% year-to-date stock decline persists despite dividend hikes and a strategic AI pivot to on-premises.

SAP is throwing its weight behind a Munich-based startup that wants to rebuild Germany's fragmented hospital IT from the ground up, but the news has done little to revive a share price still nursing deep wounds from a year-long selloff.

The software giant has joined forces with Fresenius to invest in Avelios Medical, a developer of modular, cloud-native hospital information systems built on SAP's Business Technology Platform. The startup, which employs roughly 200 people and already counts five university hospitals as clients, aims to knit together clinical and administrative workflows on a single, interoperable platform for the European healthcare market.

Fresenius brings operational know-how from its Helios chain of more than 80 hospitals — a practical edge that pure technology plays often lack. The urgency is real: support for SAP's legacy hospital system ends in 2030. For the broader digital health ecosystem, both companies had previously flagged a medium-term commitment in the mid-hundreds of millions of euros.

The investment marks the most tangible outcome yet of the AI partnership SAP and Fresenius announced back in January. But it arrives at a moment when investors are more focused on what the company is doing to revive a stock that has shed nearly 27% since the start of the year.

A Dividend Check That Can't Mask the Damage

Shareholders received some immediate relief on Friday, when SAP paid out a dividend of €2.50 per share for the 2025 financial year — a 6.4% increase from last year. The total payout comes to roughly €2.9 billion, representing a 40.7% payout ratio of non-IFRS net income, right at the lower end of the company's own dividend policy.

But the ex-dividend adjustment has done nothing to change the underlying picture. At €147.88, the stock trades more than 45% below its 52-week high of €271.60 and well under its 200-day moving average. It has clawed back some ground from the April trough of €139.12, but the recovery remains tentative.

A hefty share buyback program is running in the background — SAP completed the first tranche in early April — yet the market has so far shrugged off that signal of confidence.

Breaking the Cloud-Only Rule

The more consequential strategic shift came earlier in the week, when CEO Christian Klein announced that SAP would open its AI capabilities to customers running systems on-premises — effectively abandoning the company's long-held cloud-only stance on artificial intelligence.

The move is paired with a pricing overhaul that will shift from per-user licensing to consumption-based billing. The logic is straightforward: investors had grown increasingly vocal about the limitations of the traditional SaaS model, and the acquisitions of Dremio and Reltio were designed to ensure AI agents can access clean data regardless of where it sits.

The message to the market is clear — AI at SAP is no longer a cloud-exclusive feature. Whether that message translates into renewed buying interest is another question entirely.

Solid Fundamentals, Stubborn Valuation

The operational numbers remain strong by any measure. Cloud revenue grew 27% in the first quarter of 2026, reaching €5.96 billion on a currency-adjusted basis, while total revenue climbed 12% to €9.56 billion. The short-term cloud backlog now stands at €21.9 billion, and SAP has reaffirmed its full-year guidance for cloud revenue between €25.8 billion and €26.2 billion.

Twenty-seven analysts surveyed see a median price target of €216.48 — implying upside of nearly 47% from current levels. That gap between where the stock trades and where the Street thinks it should be is the central tension in the SAP story right now.

The healthcare partnership and the AI pricing pivot could accelerate a re-rating, but the proof will come in the quarters ahead. For a company that has delivered on its cloud targets while watching its share price get cut nearly in half, the market is clearly waiting for more than just good numbers.