The disconnect between SAP’s operating momentum and its stock price has rarely been starker. Europe’s largest software company is churning out double-digit cloud growth while its shares languish at levels not seen in over a year — and the market is demanding proof that an expensive artificial-intelligence push can eventually pay off. On Friday, the stock slipped 2.12% to €139.46, following a close of €142.48 the previous day. That leaves it nearly 31% lower since January and a staggering 47% adrift of its 52-week high.
To stem the bleeding, CEO Christian Klein has taken direct charge of the company’s AI strategy under an internal initiative dubbed “Project Fuji.” The move shifts all AI governance under the CEO and COO to speed up product development, mirroring a reorganisation announced in early July. At the same time, Klein is slashing costs with unusual ferocity: travel budgets are frozen, non-AI hiring is halted, and up to 10,000 positions are on the chopping block. The goal is to protect the operating margin from the soaring expense of building out AI infrastructure — a tension that has become the defining question for SAP’s near-term outlook.
Cloud traction meets margin anxiety
The bull case rests on genuine strength in the core business. Cloud revenue grew 27% on a constant-currency basis in the first quarter, while the cloud backlog expanded 25% in the same measure. Customers continue to migrate to S/4HANA, and the promise of more than 200 AI agents — designed to deliver measurable productivity gains for clients — could eventually justify higher pricing or usage volumes. A €2.6 billion share-buyback programme running through the end of July provides additional technical support.
Yet sceptics argue that the benefits of those AI agents are years away, while their costs are hitting now. Goldman Sachs recently trimmed its margin expectations for the second half of the year, citing rising hardware expenses and the drag from acquisitions. Other analysts have reduced their gross margin forecast for the second half of 2026 to 72.8%, a level that underscores how quickly the AI buildout is eating into profitability. The comparison with Oracle’s massive investment announcements has also weighed on the entire software sector.
Should investors sell immediately? Or is it worth buying SAP?
Technical stress and legal overhang
Technically, the picture remains fragile. SAP shares trade about 23% below their 200-day moving average of €181.08 — a gap that has historically preceded further selling. The relative-strength index sits at a neutral 46.9, offering little directional clarity. The stock touched a 52-week low of €130.80 in late June, and chart watchers view that level as either a potential springboard for a recovery or the next stop on a longer downward slide.
Meanwhile, legal clouds from the past refuse to dissipate. A revived antitrust lawsuit from Teradata — alleging years of anticompetitive behaviour — and an ongoing European Commission probe into interface restrictions for third-party vendors add to the uncertainty. The company’s current operating-profit target of €11.9-€12.3 billion already assumes a smooth execution; any deviation from that corridor could trigger violent moves.
Earnings day as judgment day
All eyes are now on July 23, when SAP releases second-quarter results. The 200-day moving average will be a pivotal hurdle: reclaiming it would signal a potential bottom, while a decisive break below €130.80 would open the door to new multi-year troughs.
For Klein, the numbers must show that Project Fuji is more than a cost-cutting exercise — that the autonomous suite of AI agents can generate measurable returns without further bleeding margins. The market has made clear it will not wait indefinitely for payback. On July 23, SAP gets its next chance to prove the arithmetic works.
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