SAP's AI Chess Moves: A New Alliance, a Steady Institutional Hand, and a Cloud Growth Engine

SAP partners with NTT DATA for AI-driven HR, cloud backlog up 27%, but UBS downgrades amid agentic AI concerns.

The narrative around SAP has rarely been more layered. On one side, the company is quietly expanding its AI footprint through a fresh global partnership. On the other, the stock is caught between a heavyweight investor holding its ground and a prominent bank trimming its enthusiasm. Beneath it all, the cloud engine continues to hum with double-digit growth.

A Strategic Alliance for People and Culture

SAP's latest move sees its human resources software SuccessFactors and its AI assistant Joule embedded into a global transformation program run by NTT DATA. The initiative, focused on the "People and Culture" domain, is designed to help enterprises worldwide digitize their HR workflows. For SAP, the collaboration represents another channel through which Joule can be positioned as the AI layer spanning its entire product portfolio, with large system integrators extending its reach into new accounts.

This is not an isolated gambit. It follows a string of growth-oriented actions, including the completed acquisitions of Dremio and Prior Labs in July, which brought data management and AI capabilities in-house. The NTT DATA deal signals that SAP is now actively feeding these building blocks into third-party sales channels rather than keeping them for internal use only.

The Cloud Numbers Do the Talking

The financial foundation beneath these strategic moves remains robust. In the second quarter of 2026, SAP's current cloud backlog expanded by 27 percent to €22.9 billion, or 26 percent on a currency-adjusted basis. Cloud revenues climbed 22 percent—24 percent adjusted for currency—while the cloud ERP suite grew even faster at 25 percent. Total revenue rose 9 percent, or 11 percent excluding currency effects.

Looking ahead, SAP guides for full-year 2026 cloud revenue between €25.8 billion and €26.2 billion, representing a currency-adjusted gain of 23 to 25 percent over the prior year's €21.02 billion. On the operating profit front, the company targets a non-IFRS figure of €11.8 billion to €12.2 billion, adjusted for currency. The Dremio and Prior Labs acquisitions are expected to create a dilution effect of more than €100 million—a cost SAP appears willing to absorb in pursuit of a stronger AI and data platform.

A Tale of Two Analyst Camps

The market's view of SAP's AI transformation is anything but unanimous. Société Générale analyst Martin Goersch, writing on August 20, placed SAP among the central European beneficiaries of what he termed the "next phase of the AI boom," grouping it with US heavyweights like Nvidia and Apple. That endorsement came amid SAP's deepening focus on so-called "agentic AI" functions.

Just days later, UBS analyst Michael Briest struck a more cautious chord, downgrading the stock from "Buy" to "Neutral." His concerns centered on sluggish integration of agentic AI features and potential deceleration in cloud order backlog growth. Disappointing guidance from US software peers added further pressure to the sector's sentiment.

BlackRock's Steady Hand

Institutional conviction, meanwhile, appears intact. BlackRock disclosed in mid-August via a voting rights notification that its stake in SAP had slipped to 6.69 percent from 6.70 percent, with the relevant threshold crossed on August 11. The change is negligible and hardly suggests a strategic retreat—BlackRock remains one of the company's largest shareholders. Such filings are legally required whenever ownership crosses specified thresholds, offering investors a window into how major asset managers are positioning themselves.

The Share Price Picture

The stock closed Wednesday at €181.04, roughly 25 percent below its 52-week high of €242.00 reached in October. It remains comfortably above the 52-week low of €127.52 from July. In the most recent session, the shares traded at €183.72, up about 1.5 percent from the prior day, having gained 17 percent over the past 30 days—though still down 12 percent year-to-date.

The NTT DATA partnership alone is unlikely to move the needle significantly. But it fits a broader pattern: SAP is systematically building distribution channels for Joule and its cloud suite while the underlying growth rates in cloud continue to support the transformation story. The open question for investors is whether the AI monetization narrative will ultimately prove as compelling as the backlog numbers suggest.