SAP’s Multibillion-Euro AI Offensive: Why Orbiting Prior Labs and Joule Hasn’t Stopped the Stock’s Slide

SAP commits over €1bn to AI startup Prior Labs, partners with NTT DATA, and overhauls Joule assistant. Despite strong cloud revenue, stock drops 28% YTD.

SAP is ploughing more than €1 billion over four years into a small German AI startup called Prior Labs, while simultaneously deepening its partnership with NTT DATA Business Solutions and reworking its assistant Joule at its annual Sapphire conference in Orlando. The message is unmistakable: business AI is no longer an add?on but the engine of the software giant’s future. Yet the stock keeps sinking — down 1.75% to €144.58 on Monday, and off 28.43% since the start of the year.

The €1bn?plus Prior Labs acquisition, announced on 4 May 2026, targets what the company calls “tabular foundation models” — AI trained on structured corporate data rather than the loose text that traditional large language models favour. That covers exactly the sort of information that fills ERP systems, financial ledgers and supply?chain logs. Completion is expected in the second or third quarter of 2026, subject to regulatory sign?offs, and the technology will begin flowing into SAP AI Core, the Business Data Cloud and Joule from the third quarter.

That dovetails with the partnership announced with NTT DATA Business Solutions, which brings more than 15,000 SAP specialists to the table. Together they aim to combine SAP AppHaus’s design methodology with NTT’s “GenAI Accelerated Toolkit” to help customers prototype and roll out smarter workflows on the SAP Business Technology Platform. The idea is to move beyond one?off AI features and embed intelligence directly into cloud ERP environments.

Joule itself is being overhauled for the Sapphire crowd in Orlando. Under the tagline “The Beginning of Better”, SAP is pitching the assistant as a central workspace that actively improves finance, HR and supply?chain processes. Live demos are meant to show that Joule can anticipate bottlenecks and propose fixes, not just answer queries. The subtext is obvious: investors are tired of hearing about AI as a promise; SAP needs to prove it can be monetised. Analyst H. Engel at Erste Group Bank still believes, though he trimmed his 2027 earnings forecast slightly to 9.83 US dollars per share from 9.85 USD. The market consensus sits at just 8.35 USD, a gap that shows how much convincing remains to be done.

The cloud business, at least, continues to hum. First?quarter cloud revenue jumped 19% (27% currency?adjusted) to €5.962 billion, pushing total group revenue up 6.0% to €9.56 billion. Earnings per share improved to €1.66 from €1.52 a year earlier. The cloud backlog — a measure of future committed revenue — reached €21.9 billion, up 20% in nominal terms and 25% after adjusting for currency swings. That gives SAP a long revenue runway even as the share price stumbles. For the full year 2026, analysts expect EPS of €7.21 on average, and management stands by its cloud?revenue forecast of €25.8–€26.2 billion.

But the market remains sceptical. The stock closed Friday at €146.20, a 3.42% daily loss, and has now surrendered the €150 level. Over the past twelve months the decline exceeds 40%, and year?to?date it is roughly 30%. The broader software sector is wrestling with growth concerns and the fear that AI could disrupt established business models rather than enrich them. SAP’s challenge is to flip that narrative by showing that the Prior Labs deal, the NTT alliance and the Joule upgrade all lead directly to higher?margin cloud subscriptions.

The next litmus test comes on 23 July, when the second?quarter report is due. By then, the Prior Labs transaction may be close to completion, and investors will want to see whether cloud momentum can accelerate enough to offset the heavy investment spend. For now, SAP is betting that a data?focused AI strategy, backed by a €7.7 billion pile from the Qualtrics sale in 2023, can eventually turn the share price around — even if the market needs a few quarters of proof.