SAP's Pricing Revolution Meets a Skeptical Market

SAP faces a critical test with Q1 earnings, a shift to AI pay-per-use pricing, and its AGM. Investors seek clarity on growth targets amid a 25% stock decline.

The coming days represent a critical juncture for SAP, as the software giant prepares to report earnings, host its annual meeting, and fundamentally alter how it charges for artificial intelligence. This confluence of events will test investor confidence in a stock that has shed nearly a quarter of its value since January, currently trading around 153 euros.

All eyes are on the first-quarter results due April 23. Analysts are forecasting an 18 percent increase in cloud revenue and an 11 percent rise in operating profit. Yet the primary focus will be the cloud backlog, a key indicator of future revenue which recently stood at over 21 billion euros. SAP has targeted currency-adjusted growth of up to 25 percent for this metric this year, but a slight miss in January has left investors demanding proof that contracts are converting into solid sales.

Simultaneously, the company is engineering a profound shift in its business model. Come July, SAP will abandon subscription-based pricing for its AI services, moving instead to a pay-per-use system. CEO Christian Klein is betting this consumption-based model better reflects how AI agents are deployed, moving beyond traditional per-user licenses. To accelerate implementation, the company will also deploy dedicated developer teams directly to customer sites starting this summer. While this pivot could secure long-term growth in a dynamic market, it introduces near-term uncertainty for financial planning.

The strategic overhaul extends beyond pricing. In late March, SAP announced its acquisition of US data specialist Reltio, a deal expected to close by the third quarter. The move aims to unify corporate data, making it fully usable for AI applications and forming a core part of the company's aggressive technology strategy.

This high-stakes period continues with the virtual Annual General Meeting on May 5. Shareholders will vote on a proposed dividend of 2.50 euros per share. Approval would mark a milestone of financial consistency, representing the 25th consecutive year without a dividend cut for the Walldorf-based firm.

Market sentiment remains divided. Barclays maintains a buy rating with a 220-euro price target, expressing confidence in the long-term trajectory. In contrast, JPMorgan holds a neutral stance, citing a fair value of 175 euros and highlighting risks from potential budget cuts among US clients due to new tariff policies. Broader macroeconomic concerns and unclear US trade policy continue to make industrial customers hesitant about major IT investments, a headwind CEO Klein has already warned will pressure margins in the short term.

The upcoming earnings call, featuring Klein and CFO Dominik Asam, is pivotal. Management must quantify the financial impact of the new pricing model and reaffirm growth targets for 2026. Failure to convince the market could see the stock retest its recent 52-week low of 139.12 euros. For a sustainable recovery, the share price needs to convincingly break above the 50-day moving average, currently near 160 euros. The ultimate proof, however, will come at the SAP Sapphire conference in May, where the company must demonstrate its aggressive AI strategy is finally translating into tangible profits.