SAP enters one of its most consequential weeks of the year with a freshly sealed €1 billion acquisition, a closed EU antitrust investigation, and a share price that has yet to respond to either. On July 23, the software giant will report second-quarter and first-half 2026 results, a moment that could determine whether the recent run of positive developments marks a turning point or merely a pause in the stock’s slide.
The company has formally completed its purchase of Prior Labs, a Freiburg-based artificial intelligence startup that was founded just 18 months ago. The startup specializes in AI for tabular data — the structured datasets that dominate enterprise resource planning systems. Its technology is already deployed by Hitachi for predictive maintenance on a Spanish high-speed rail line and by OxCan for early lung-disease detection. For SAP, the deal plugs into its broader AI strategy centered on the Joule assistant and the Business AI platform, though whether Prior Labs evolves into a European counterpart to DeepMind remains an open question.
Alongside the acquisition, SAP has released a flurry of AI products in the second quarter: Joule Work as an early-adopter program, a generally available mobile app, voice functionality for Joule, and autonomous agents for supply-chain and finance processes. Early customer results are striking — Bosch reports a 20% productivity boost, Aeropuertos Argentina a 16% cost reduction, PwC a 60% efficiency gain in tax processing, and LC Waikiki a 40–60% acceleration in HR cycles. Yet the market has so far treated these announcements with caution. The stock currently trades near €139, having recently been quoted at €139.24 in one note and €138.84 in another, both within a few percent of the 52-week low of €130.80 set in late June.
The technical picture reinforces the sense of drift. The share price sits below both its 50-day moving average of €144.62 and its 200-day moving average of €175.85 — a configuration that signals no clear reversal of the downtrend. A support zone between €130 and €135 has held so far, while a break above €145 would be considered a bullish signal. The 30-day annualized volatility of 36.38% suggests investors are bracing for significant movement around the earnings release.
At the center of the Q2 report will be the current cloud backlog, the leading indicator of future cloud revenue. SAP has already flagged that growth in this metric is likely to moderate slightly in constant currencies in 2026. If the deceleration proves more pronounced than the company’s own guidance implies, it could validate the market’s growing skepticism. Conversely, if the backlog remains robust and management provides a clearer timetable for monetizing its AI agent investments, the report could offer a stabilization signal.
Should investors sell immediately? Or is it worth buying SAP?
Analyst sentiment is divided. UBS’s Michael Briest cut his price target from €205 to €164 after the Prior Labs announcement, citing slow adoption of AI agents among large enterprises — a view that echoes SAP’s own cautious language. He nonetheless maintains a “Buy” rating, implying roughly 19% upside from current levels. JPMorgan’s Toby Ogg, by contrast, kept a “Neutral” rating and a €175 target in a July 17 note, arguing that enterprise software budgets are shifting away from traditional ERP toward cloud, observability, and cybersecurity, creating a structural headwind for SAP.
An external factor has also weighed on sentiment. IBM’s shares collapsed by roughly a quarter last week after disappointing results tied to high chip costs, dragging the broader software sector down. SAP was not immune to the spillover, and the stock has yet to recover that ground.
On the positive side, an overhang was removed on July 13 when the European Commission closed its cartel investigation into SAP without imposing a fine. The company’s own share buyback program of up to €2.6 billion has also failed to provide meaningful support. Neither development has shifted the stock’s trajectory, leaving the chart technically fragile.
One intriguing technology milestone came from internal testing of SAP’s own ABAP-1 language model, trained on 250 million lines of ABAP code. In a benchmark of pure code comprehension, it underperformed against Claude Opus 4.5. GPT-5 achieved a 77.11% success rate after five rounds with compiler feedback, versus 19.28% without it. SAP recommends ABAP-1 mainly for explanatory purposes rather than autonomous code generation, and access via Joule for Developers remains free until September 2026.
As the market waits for July 23, two scenarios dominate. If the cloud backlog lands within the modest deceleration SAP itself has described and full-year guidance is reaffirmed, the stock may remain range-bound between its 52-week low and the 50-day moving average — a potential base-building phase. If the backlog disappoints or the AI monetization narrative stays vague, pressure toward the recent low could intensify. The analyst consensus on cloud growth and margin development will be the immediate yardstick against which SAP’s €1 billion AI bet — on tabular data, on agents, and on a transformed business model — will be measured.
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