SAP Bets €1bn on AI Start-Ups While the Market Sours on Its Shares

Despite acquiring Prior Labs, Reltio, and Dremio for AI data foundation, SAP's stock is down 30% YTD near 52-week low. Jefferies bullish with €230 target, but revenue misses and lack of new targets weigh.

The gap between SAP's strategic ambition and its stock price has rarely been as wide. The German software giant is spending more than a billion euros on artificial intelligence acquisitions and rolling out an autonomous suite of AI agents — moves that Jefferies applauds with a €230 price target. Yet the shares are trading within a whisker of their 52-week low, down more than 30% year-to-date, and every bullish analyst call has so far failed to turn the technical tide.

SAP’s latest acquisition brings a new vector to its AI push. The company has signed a binding agreement to buy Prior Labs, a Freiburg-based start-up that builds tabular foundation models designed for structured business data — the kind of numbers, tables and statistics where standard large language models often stumble. The deal, expected to close in the second or third quarter of 2026, calls for SAP to invest over €1 billion across four years. Prior Labs will operate as a standalone unit.

That purchase follows the closure earlier in May of the Reltio acquisition, a master data management specialist whose technology unifies customer, product and supplier data from both SAP and non-SAP systems, cleaning it for AI consumption. SAP has also lined up the acquisition of Dremio, a data-lakehouse provider that helps stitch together disparate data sources. The common thread: agent-based AI models are only as good as the data they feed on, and SAP is buying its way toward a cleaner data foundation.

The strategy was unveiled in detail at SAP Sapphire in Orlando, where CEO Christian Klein introduced the Autonomous Suite. The platform will embed more than 50 domain-specific Joule assistants, coordinating over 200 specialised AI agents across finance, supply chain and HR. It is a clear attempt to move AI from an add-on feature to the core of SAP’s value proposition.

Jefferies analyst Charles Brennan responded by reiterating his buy recommendation and €230 target, describing the AI strategy as a solid, incremental advance. He noted that the shift in perspective — from AI easing S/4HANA migrations to being deeply integrated into products and processes — aligns with the cloud monetisation model. Oppenheimer, more cautious, stuck with its “Perform” rating, acknowledging the substance of the narrative while demanding visible evidence in the financials.

That evidence remains elusive for the time being. SAP’s cloud revenue grew 19% in the first quarter of 2026 (27% currency-adjusted), with the cloud backlog reaching €21.9 billion. The full-year forecast calls for cloud revenue in the mid-twenty-billion-euro range and currency-adjusted growth between 23% and 25%. Non-IFRS operating profit is targeted at €11.9 billion to €12.3 billion, and the company has authorised a share buyback of up to €10 billion through the end of 2027.

However, overall revenue came in below expectations, and management held to its existing annual guidance without introducing new financial targets at Sapphire, limiting the immediate catalyst for the stock. The market, for now, is fixated on the chart rather than the strategy session.

In early May, SAP shares closed at €141.26, a mere 2.36% above the 52-week low of €138.00 at the time. The 12-month decline stood at 46.36%, and the stock was trading 27.88% below its 200-day moving average. By mid-May, the price had slipped further to €138.90, widening the year-to-date loss to 31.24% and stretching the distance from last year’s peak of €271.60.

Two narratives now coexist. On the fundamental side, analysts highlight the cloud transition, the AI build-out and increasingly predictable recurring revenues. The technical picture, though, remains dominated by a persistent downtrend that has not yet reversed. The Sapphire conference may have sharpened the long-term story, but for SAP to close the credibility gap, it must convert its billion-euro AI bet into measurable cloud acceleration and visible earnings momentum. Until then, the stock is likely to remain trapped between a strategic offensive and a market that is waiting for proof.