A 52-week low in the rearview mirror, a €10 billion buyback as backstop, and a crucial earnings report just over a fortnight away. SAP’s stock is caught between fresh strategic concessions and deep structural headwinds, leaving investors counting the days until July 23.
The Walldorf-based software giant ended last week with a 3.9% bounce to €136.16 on Xetra, after touching a new 12-month trough of €130.80 on Thursday. Yet the year-to-date decline now stands at roughly 33%, and the distance from the 52-week high of €266 is close to 50%. The relative strength index at 41.4 suggests the selloff has lost its panic-driven momentum, but the underlying pressure has not dissipated.
In a bid to stem project cancellations among large enterprise clients, SAP has quietly dropped its hard-line cloud-only mandate for the AI assistant Joule. The assistant will now operate in hybrid infrastructure environments, allowing customers to access new AI features without fully migrating to the cloud. Market observers see the move as a pragmatic response to real-world deployment hurdles, though it does little to address the mounting cost challenge that is squeezing margins.
Goldman Sachs recently lowered its margin forecast for the second half of 2026, citing rapidly escalating hardware expenses tied to the global race for AI compute capacity. Rivals like Oracle are pouring billions into infrastructure, raising the spectre that SAP will have to follow suit — further crimping near-term profitability. That margin anxiety is compounded by a broader malaise in European software stocks, which prompted Jefferies analyst Charles Brennan to cut his price target on SAP from €230 to €210, even as he maintained a buy rating. The second-quarter reporting season, he cautioned, is unlikely to generate much momentum.
Should investors sell immediately? Or is it worth buying SAP?
The analyst community is deeply split. UBS and Berenberg remain buyers (Berenberg’s target is €215), while JPMorgan sits at neutral and DZ Bank has been a sell since April. Morningstar gives the stock five stars, calling it significantly undervalued with a sustainable competitive moat. CEO Christian Klein added to the uncertainty with a recent interview remark that in three to four years “nobody will develop software anymore,” a comment that fanned fears about the erosion of traditional licensing revenue.
SAP has been in its quiet period since June 22, meaning no official commentary on sales, margins or guidance until the half-year numbers are released on July 23, followed by an analyst call at 23:00 CET. Trading volumes have been conspicuously thin — at times just a quarter of normal daily turnover — suggesting the slide was driven not by panic selling but by steady, low-key distribution. The first quarter offered some solidity: total revenue rose about 6% to €9.56 billion, cloud revenue surged 27% on a currency-adjusted basis to nearly €6 billion, and the cloud backlog stood at €21.9 billion. However, even better-than-expected figures have recently failed to lift the share price, raising the question of whether Q2 data will be enough to turn skeptical investors around.
One bright spot that could gain longer-term significance is a regulatory milestone achieved in June. The Federal Office for Information Security (BSI) granted SAP’s Cloud Infrastructure in Walldorf approval to handle classified information up to the level “Nur für den Dienstgebrauch” (restricted). SAP claims it is the only provider whose platform can run both its own applications and customer workloads in compliance with that standard. The clearance is a stepping stone toward full ISO 27001 certification based on IT baseline protection, and it could become a meaningful growth lever for government and defence business. In the short run, though, all eyes remain fixed on July 23 — and whether SAP can prove that its cloud transition still has enough fuel to climb out of the technical hole it has dug.
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