SAP Spends Big on AI Startups, but Its Stock Remains at the Mercy of Earnings

SAP stock near 52-week low ahead of July 23 earnings; €1B Prior Labs AI acquisition and 'Autonomous Enterprise' vision face market skepticism.

SAP has entered its quiet period ahead of second-quarter results, with the software giant set to report on July 23. The stock is hovering just 5.89% above its 52-week low of €130.80, reflecting deep investor skepticism that has wiped out more than a third of its value since the start of the year. All eyes are now on whether the company’s aggressive AI acquisition spree will translate into a catalyst when the numbers land.

The most recent piece of that spending spree was finalized on July 17: the takeover of Prior Labs, a Berlin-based AI startup specializing in tabular foundation models. The price tag exceeds €1 billion, with over $500 million paid in cash. Founded in 2024 by Frank Hutter, Noah Hollmann, and Sauraj Gambhir, Prior Labs developed TabPFN, a technology designed to make predictions on structured data — precisely the kind of enterprise information SAP has been processing for decades. SAP chief technology officer Philipp Herzig has called structured data the single biggest opportunity in enterprise AI, and the deal underscores how seriously the company is taking that bet.

Prior Labs will operate as an independent brand within SAP, though the company plans to fully integrate the startup’s research methodology and open-source philosophy. The acquisition follows two other deals this year: the purchase of data-processing specialist Dremio and the addition of data unification provider Reltio in May. Together, they form a toolkit that SAP hopes will complete the AI value chain for its enterprise customers, from data cleansing to model building.

The broader strategy was laid out at SAP’s Sapphire conference, where CEO Christian Klein unveiled the “Autonomous Enterprise” vision. The concept bundles AI agents, automation, and governance into a single Business AI Platform that merges the Business Technology Platform, Business Data Cloud, and Business AI. The digital assistant Joule is slated to evolve into an operational tool that independently handles multi-step workflows across procurement, finance, HR, and supply chain. Klein stressed accuracy and control as non-negotiable for such systems. Yet early reports from companies like Hapag-Lloyd suggest that even the best technology fails without deep employee involvement — a challenge SAP’s customers are still grappling with.

Market conditions outside SAP’s control are compounding the pressure. Disappointing preliminary quarterly figures from rival IBM in mid-July dragged down the entire European software sector, as investors fretted that corporate IT budgets are shifting toward AI hardware rather than enterprise software. UBS analyst Michael Briest responded by cutting his SAP price target from €205 to €164 on July 13, though he maintained a Buy rating, citing the complexity of integrating AI into existing ERP systems.

Meanwhile, the SAP ecosystem is seeing its own consolidation: French construction group VINCI, via its VINCI Energies subsidiary, is acquiring SAP partner All for One for €67.50 per share — a 95.5% premium — to combine networking and data-center expertise with S/4HANA cloud know-how. The offer requires a 75% minimum acceptance and antitrust clearance, with a control agreement explicitly ruled out until 2029.

For now, the Prior Labs deal has done little to lift SAP’s stock. The shares closed at €138.50 on Friday, down 1.81%, and remain 33.53% below where they started the year. The company’s capital efficiency metrics — a return on invested capital of 68.68% and a debt-to-free-cash-flow ratio of 0.97 — point to a solid underlying business, but the market is waiting for clearer proof that the AI investments will generate revenue. The July 23 earnings report, where analysts expect revenue of €9.85 billion and earnings per share of €1.76, will be the first real test of whether SAP can turn its shopping binge into a story that wins back investors.