As SAP prepares to release its first-quarter results, the software giant is sending mixed signals to a skeptical market. On one hand, it is deploying billions to shareholders and deepening a key artificial intelligence partnership. On the other, its stock remains under severe pressure, down roughly a quarter since the start of the year. The figures due after the U.S. close on Thursday, April 23, will test whether operational performance can finally bridge that gap.
The company’s financial capacity to reward investors is not in doubt. For the past fiscal year, the supervisory and executive boards have proposed a dividend of 2.50 euros per share. Concurrently, a new share buyback program is launching, with an initial tranche of up to 2.6 billion euros set to run until July 2026. This aggressive capital return rests on a robust foundation: SAP’s free cash flow nearly doubled last year to just over eight billion euros, with management targeting the ten-billion-euro mark for 2026.
Operational hopes are pinned squarely on cloud growth. For the current year, SAP has forecast a significant increase in cloud revenue. Analysts, polled by Zacks, anticipate total revenue of approximately $11.3 billion for the opening quarter, with earnings per share expected to come in at $1.91. For the full 2026 fiscal year, the consensus earnings estimate stands at around 7.18 euros per share.
Yet, shadows loom over this transition. The growth of SAP’s cloud backlog has recently slowed, while U.S.-China trade tensions continue to pressure the classic on-premise software license business. Market observers cite these as primary reasons for the stock’s weakness. The share price closed Wednesday at 149.84 euros, down 0.45 percent on the day and nearly 45 percent below its 52-week high of 271.60 euros.
In a strategic move announced just a day before earnings, SAP is expanding its AI collaboration with Google Cloud. The enhanced partnership will integrate SAP’s Engagement Cloud and CX solutions with its own AI assistant, Joule, and Google’s Gemini Enterprise. The goal is to build multi-agent AI systems that can autonomously access data across both platforms using a “zero-copy” approach via SAP Business Data Cloud Connect and Google BigQuery. SAP plans to make this available in the second half of 2026, promising faster campaigns and lower operating costs. The company is also advancing robotics, testing humanoid robots in a Duisburg warehouse controlled by its Extended Warehouse Management system.
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This AI push is twofold. In March, SAP announced the acquisition of U.S. software specialist Reltio, a deal designed to better prepare enterprise data for AI applications. While financial terms were not disclosed, the transaction is expected to close by the third quarter.
Despite these initiatives, the market has been unmoved, reflecting broader industry anxiety that generative AI could displace traditional software solutions. SAP’s strategy of integration over confrontation, exemplified by the Google deal, has yet to convince investors. In a note on Wednesday, HSBC upgraded SAP to “Buy” from “Hold,” though it trimmed its price target to 182 euros, citing a challenging market environment rather than doubts about the business model.
Regulatory scrutiny adds another layer of complexity. The European Commission is currently examining support and maintenance practices for on-premise software, investigating whether SAP pressures customers into unnecessarily long service agreements.
All eyes are now on the quarterly report. If SAP surpasses consensus estimates as it has in recent quarters, investor focus will likely snap back to its compelling free cash flow target. However, the most critical metric may be the cloud backlog. A stronger-than-expected expansion there would provide a more powerful catalyst for the stock than any partnership announcement, offering tangible proof that SAP’s strategic bets are gaining traction where it matters most.
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