SAP's Share Buyback Fails to Halt Stock Decline

SAP shares struggle despite a major buyback as client trade pressures and AI competition overshadow strategic moves like the Reltio acquisition.

Despite launching a substantial share repurchase initiative valued at up to €10 billion, SAP SE continues to see its share price struggle. The software giant finds itself in a challenging position, driven less by its own operations and more by the economic pressures facing its core client base.

External Headwinds Outweigh Capital Return

While the Walldorf-based company has limited direct exposure to new U.S. import tariffs—cloud software itself is not subject to duties—its business is feeling the indirect impact. SAP's traditional stronghold, industrial manufacturing firms, are under significant strain from these trade measures. Following a Supreme Court decision to overturn previous IEEPA tariffs, the Trump administration has imposed new levies under the Trade Act of 1974, starting at 10% with a planned increase to 15%. This environment may lead industrial customers to postpone costly cloud migration projects and tighten their IT budgets, directly affecting SAP's growth engine.

The market reaction has been stark. SAP shares are down approximately 30% year-to-date, trading nearly 50% below their 52-week high. A buyback program active since February, aiming to repurchase up to €2.6 billion in stock by July 2026, has so far failed to reverse the downward trend. This is part of a broader repurchase framework extending to the end of 2027 with a total volume of €10 billion, of which €1.5 to €2 billion annually is allocated for share-based compensation.

Analyst Sentiment Turns Cautious

Market experts are offering mixed reactions to the current situation. Barclays analyst Sven Merkt reduced his price target from €240 to €220, though he maintained an "Overweight" rating. JPMorgan took a more decisive step, slashing its target from €260 to €175 and downgrading the stock from "Overweight" to "Neutral." The bank cited heightened competitive risks, particularly from emerging artificial intelligence applications, as a key reason for the change.

Strategic Acquisition and the Path Forward

In a strategic move announced in late March, SAP plans to acquire Reltio, a provider of master data management software. The objective is to enable customers to prepare both SAP and non-SAP data for AI applications. This transaction is intended to bolster the SAP Business Data Cloud (BDC), a central component of the company's "AI-first" strategy. Financial terms were not disclosed, with closure anticipated in either the second or third quarter of 2026.

The BDC platform has faced adoption challenges. A December survey by the German-speaking SAP user group DSAG revealed that 83% of its members had little to no familiarity with the product. The integration of Reltio's technology is designed to address this issue, with user metrics in upcoming quarters serving as a key indicator of its success.

Investors are now in a quiet period, with management refraining from commentary on current business performance. All eyes are on April 23, 2026, when SAP will release its first-quarter results. Consensus estimates project earnings per share of €1.64 for the quarter and €7.31 for the full year. The stock could find relief if cloud growth remains stable and AI functionalities contribute tangibly to new contracts. Should the results disappoint, even the ongoing share repurchase program is unlikely to provide meaningful support.