SAP Shares Navigate a Multifaceted Challenge

SAP shares plunge as it pivots to AI pricing, settles a $480M lawsuit, and faces a potential new class action. The company is deploying a €10B buyback amid the downturn.

SAP's equity finds itself under significant pressure, trading at its lowest point in more than two years. This decline coincides with a period of profound strategic transition for the software giant, even as it resolves one major legal issue only to potentially face another.

Strategic Pivot Towards AI Amid Investor Skepticism

CEO Christian Klein is orchestrating a fundamental shift in SAP's business model. The company plans to move away from its traditional subscription framework, implementing a consumption-based pricing system for its artificial intelligence services by July 2026. This ambitious overhaul is being accompanied by the creation of a new internal unit, staffed by several hundred employees, dedicated to co-developing AI applications directly with customers.

This accelerated focus on AI comes in response to reported waning confidence among investors regarding SAP's AI technology, notably its Joule assistant, as highlighted by Bloomberg. Management's structural countermeasures will face their first tangible test with the quarterly results scheduled for April 23, 2026, which will indicate if these efforts are meeting market expectations.

Legal Landscape: One Settlement, One New Threat

On the legal front, SAP recently closed a long-standing chapter by settling its dispute with Teradata in mid-February for $480 million. This resolution averted a jury trial originally set for late March, removing a substantial element of legal uncertainty for the company.

However, a new potential challenge has emerged immediately thereafter. The Portnoy Law Firm is considering a securities fraud class action lawsuit on behalf of SAP investors. This prospect stems from a share price decline in September 2024, triggered by revelations that the U.S. Department of Justice had been investigating since 2022 over allegations that SAP systematically overcharged government agencies.

Share Buybacks Deployed Against Market Downturn

SAP's stock recently closed at €152.80, a level approximately 29% below its 200-day moving average of €215. Since the start of the year, the shares have shed nearly a quarter of their value.

In response to this downward trend, the company is actively utilizing a share repurchase program. In just one week, from March 9 to 13, SAP acquired 50,000 of its own shares for a total of €8.4 million. The broader buyback initiative is authorized to spend up to €10 billion over a two-year period.

Despite the significant correction, some analysts see value. Bank of America maintains that SAP is notably undervalued, rating it as a top pick for 2026. The firm points to a price-to-earnings ratio of 23 alongside an expected annual earnings growth rate of 18% through to 2028. A consensus of 37 analysts forecasts average revenue of €40.6 billion for the current fiscal year, representing an increase of roughly 10% over the prior year.