The disconnect between SAP’s operational performance and its stock price has become a chasm. While Europe’s largest software company posted robust cloud growth and margin expansion last year, its shares have cratered, losing 28.70 percent since the start of the year. Closing recently at 144.02 EUR, the stock is a mere 3.52 percent above its 52-week low, largely untouched by the broader market’s stabilization.
A pervasive “AI panic” is gripping the sector, according to market observers. Investors are fleeing traditional software models, fearing rapid obsolescence from next-generation artificial intelligence. Advanced developments like Anthropic’s “Mythos” model are seen as a direct threat to legacy IT infrastructure, particularly in banking. Capital is flooding instead into physical AI domains like semiconductors and robotics, leaving classic SaaS providers like SAP in the shadows.
This sell-off obscures a fundamentally stronger business. In the fourth quarter, SAP’s cloud revenue grew by 19 percent. Its operating margin jumped significantly from 21.5 to 26.4 percent, and free cash flow returned to positive territory. The market has offered little reward for this progress.
The upcoming quarterly report on April 23, 2026, is now a critical juncture for direction. Analysts have positioned their expectations, anticipating earnings per share (EPS) of $1.66, up from $1.60 a year prior. Quarterly revenue is projected at $9.57 billion, with a full-year 2026 sales forecast of $47.28 billion. Meeting these ambitious targets could provide a fundamental basis for stabilization above the current annual low.
Beyond technological fears, SAP faces tangible headwinds from its core customer base. Industrial clients in the manufacturing sector are under pressure from rising costs due to US tariffs and dwindling planning certainty. In this environment, expensive migrations of ERP systems to the cloud are being postponed or canceled. This explains why the stock has missed the recent market recovery.
Should investors sell immediately? Or is it worth buying SAP?
Simultaneously, the sector contends with rising infrastructure costs. Soaring prices for scarce cloud capacity threaten to erode software companies’ profitability medium-term. In response, analysts are adjusting models. BMO Capital Markets, for instance, recently lowered its price target while maintaining an “Outperform” rating.
Internally, SAP is attempting to lower barriers for hesitant customers. The company plans to shift its pricing models, aiming to bill AI services more heavily based on usage. Whether this is enough to halt the downward pressure on order backlogs remains an open question.
On capital allocation, the company holds firm to its commitments. A dividend of 2.50 EUR per share is up for a vote, with an ex-dividend date of May 6. The ongoing share buyback program of up to ten billion euros continues until the end of 2027.
The first-quarter report will reveal if the stock’s decline is an overreaction or if the valuation correction has further to run. The cloud backlog figure will be the decisive indicator, showing whether customers continue to commit despite uncertainty or if broader economic pressures are already leaving a mark.
Ad
SAP Stock: Buy or Sell?! New SAP Analysis from April 14 delivers the answer:
The latest SAP figures speak for themselves: Urgent action needed for SAP investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from April 14.
SAP: Buy or sell? Read more here...
