SAP Faces a Mixed Test as UBS Cuts Valuation and IBM’s Shock Ripples Through Software
Published on 07/17/2026 at 03:51 | Redaktion boerse-global.de
SAP’s shares are heading into a crucial earnings update with a strange combination of support and pressure. UBS has kept its Buy rating on the German software group, yet on 15 July the bank slashed its price target from 205 to 164 Euro. At the same time, the broader software sector is still digesting a bruising reaction to IBM’s latest numbers, a development that has unsettled investors across the industry.
The stock’s recent slide has been sharp. On Thursday, SAP traded at 141,06 Euro in one report, while another put the latest price at 136,22 Euro after a 5,6 percent drop on 15 July triggered by IBM’s disappointing 17,2 billion US-Dollar in revenue versus expectations of 17,86 billion US-Dollar. Since the start of the year, the shares have lost either 30,17 percent or 32,56 percent, depending on the reference point used in the two market snapshots. Over the past 12 months, the decline stands at 46,92 percent. The stock is also now just 4,14 percent above its 52-Wochen-Tief of 130,80 Euro, set at the end of June.
UBS analyst Michael Briest argued that the lower target is mainly a question of valuation rather than a verdict on SAP’s business model. In his view, SAP’s complex ERP systems are both an advantage and a challenge for the company’s AI strategy. JPMorgan, by contrast, left its view unchanged at Neutral with a target of 175 Euro. The average analyst target is currently around 200 Euro, underlining how wide the range of opinions has become.
The sector backdrop has not helped. IBM’s weak report has raised fears that IT budgets may tilt further toward hardware infrastructure and chips rather than software applications. That shift could weigh on SAP’s cloud business as capital rotates out of software names and into the equipment needed to build AI infrastructure. Oracle has added to that theme by announcing multi-billion-dollar spending on AI infrastructure, reinforcing the sense that the market is rewarding the picks-and-shovels side of the AI trade.
Should investors sell immediately? Or is it worth buying SAP?
SAP is also in its Quiet Period ahead of results, so the company is not commenting on current trading. The next big date is 23 July 2026, when SAP will release second-quarter and first-half figures. The earnings announcement is scheduled for 22:05 Uhr MESZ, followed by the analyst conference at 23:00 Uhr.
Investors will be looking first at the cloud order backlog, which is seen as the best gauge of growth momentum. They will also watch how quickly existing customers migrate to the cloud ERP suite and whether SAP’s Business AI offerings are gaining traction. The market will be particularly focused on the company’s AI monetization efforts and the progress of its AI agents, including the Joule assistant.
Beyond the earnings debate, SAP has also been clearing away some operational and regulatory issues. The EU-Kommission has accepted the company’s commitments in the antitrust case that began in September 2025 over on-premise maintenance services, closing the matter without a fine. As part of the settlement, SAP will no longer charge reactivation fees for returning customers and will make third-party support easier.
Security remains another concern. During the July patch day, SAP warned about a critical vulnerability, CVE-2026-44747, affecting NetWeaver AS ABAP. The flaw carries a CVSS score of 9,9, close to the maximum, and customers were told to disable specific ICF nodes immediately or install the available patches without delay.
Strategically, SAP has kept building out its data platform capabilities. In early July, it completed the acquisition of Dremio, a data-lakehouse platform provider, following the announcement in April that it intended to buy Reltio Inc., a master data management specialist. Both deals are meant to make enterprise data more ready for AI use and support SAP’s broader “Autonomous Enterprise” strategy.
SAP at a turning point? This analysis reveals what investors need to know now.
Buybacks are continuing in the background as well. The first tranche of SAP’s share repurchase programme, worth up to 2,6 Milliarden Euro as part of a total programme of up to 10 Milliarden Euro, is due to be completed via the market by 27 July. That support has helped at the margin, but it has not yet offset the broader pressure on the stock.
Even after UBS’s lower target, the German group still has a wide gap between market price and analyst expectations. Whether the stock steadies or stays under pressure now depends heavily on what SAP says on 23 July about cloud growth, the AI rollout and the pace at which it can convert those strategic investments into results.
Ad
SAP Stock: New Analysis - 17 July
Fresh SAP information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.
Disclaimer regarding our articles: No investment advice, no buy or sell recommendation. Information on prices, companies, and markets is provided without guarantee; changes are possible at any time. Stock market transactions can lead to substantial losses. Our articles are created and reviewed in whole or in part automatically with the support of AI.
