SAP is overhauling its approach to artificial intelligence, shifting from fixed subscriptions to a pay-per-use model starting in July. This strategic departure from traditional licensing comes as the Walldorf-based software giant attempts to accelerate adoption of its Business AI tools, which have so far seen limited uptake among its customer base.
The company’s ambitious product vision faces a sobering reality. A recent survey by the German-speaking SAP user group DSAG found only three percent of customers are using SAP Business AI productively. The majority of companies experimenting with AI are opting for external tools like Microsoft Copilot instead. A key barrier has been SAP’s own structure: its Joule AI assistant functions exclusively with modern cloud subscriptions, locking out clients with classic server installations.
Earnings Under the Microscope
All eyes are now on the company’s first-quarter results, due after the market closes on Thursday, April 23rd. CEO Christian Klein and CFO Dominik Asam will need to quantify the financial impact of the new consumption-based pricing model. Analysts, on average, anticipate an 18 percent increase in cloud revenue and an 11 percent rise in operating profit for the period.
Investor sentiment remains cautious. The SAP share price has shed roughly 25 percent of its value since the start of the year, closing at 150.82 euros. The stock is hovering near its recent 52-week low of just under 139 euros. A disappointing cloud growth forecast earlier this year spooked the market, and the upcoming report is seen as a critical test of the company’s ability to meet its full-year cloud revenue target of approximately 26 billion euros.
Acquisition and Implementation Push
Should investors sell immediately? Or is it worth buying SAP?
To bolster its AI capabilities, SAP is acquiring data specialist Reltio. The US company’s technology prepares enterprise data for AI applications, regardless of the source system. The transaction is expected to close mid-year, though financial details were not disclosed. This move aims to create the clean data foundation required for SAP’s expanded Joule platform, which now features over 40 specialized agents designed to manage business processes in finance and supply chains.
Parallel to the pricing shift, SAP is deploying dedicated developer teams to customer sites starting this summer. These units are tasked with building tailored AI solutions on location, with the goal of significantly speeding up implementation.
Analyst Divide and Cloud Concerns
Wall Street analysts are divided on the stock’s prospects. Barclays maintains a Buy rating with a price target of 220 euros. JPMorgan is more circumspect, rating the shares Neutral with a fair value estimate of 175 euros, citing potential budget cuts among US customers due to new tariffs.
A critical focus remains the cloud backlog. After a slight miss on expectations in January, investors are demanding proof that SAP can efficiently convert its contract pipeline into solid revenue. The management’s ability to reaffirm its growth targets for 2026 during the Thursday evening conference call will be paramount. Failure to convince the market could see the stock quickly retest its recent lows.
Ad
SAP Stock: Buy or Sell?! New SAP Analysis from April 20 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 20.
SAP: Buy or sell? Read more here...
