SAP Faces a Pivotal Earnings Test After AI-Driven Stock Slide
Published on 07/23/2026 at 05:51 | Redaktion boerse-global.de
The software giant SAP is heading into its second-quarter earnings release on Thursday evening with its stock nursing heavy losses and trading dangerously close to a 52-week low. The shares closed Wednesday at €130.78, down 3.74% on the day, leaving them just 0.83% above the year's trough of €129.70 set only the day before. Another data point puts the closing price even lower at €130.36, reflecting a 4.29% single-day decline and a mere 0.34% cushion above the €129.92 low. Either way, the picture is stark: the stock has shed 37.43% since the start of 2026 and now sits 25.18% below its 200-day moving average.
The sell-off comes as broader technology markets brace for a wave of earnings reports, with the Fear & Greed Index signaling growing investor caution. For SAP specifically, the weakness reflects a broader risk-off mood in the software sector and lingering doubts about whether the company's massive investments in artificial intelligence will translate into near-term revenue. The Relative Strength Index stands at 37.1, indicating persistent selling pressure without yet reaching oversold territory, while the 30-day annualized volatility of roughly 34% underscores the heightened anxiety surrounding the stock.
Cloud Revenue in the Spotlight
All eyes are now on the numbers due after the US market close at 22:05 CEST, followed by an analyst call at 23:00. The consensus calls for second-quarter total revenue of €9.85 billion, with the cloud business — SAP's primary growth engine — expected to deliver around €6.26 billion, representing growth of roughly 22%. One source pegs the cloud consensus slightly lower at €6.255 billion, while the half-year total revenue estimate stands at €26.2 billion. With the stock already trading near its floor, there is little room for disappointment: a miss on cloud revenue could trigger a sharp sell-off, while a beat might provide the catalyst needed to reverse the recent slide.
The gap to the 50-day moving average of €144.35 illustrates just how far the stock has fallen in recent weeks, and the earnings report now represents the most critical near-term event for the DAX-listed company.
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A Billion-Euro Bet on Frontier AI
The earnings land in the middle of an aggressive strategic pivot toward artificial intelligence. On July 17, SAP completed the acquisition of Vienna-based AI startup Prior Labs, committing to invest more than €1 billion over four years to develop the company into an independent frontier AI research lab focused on structured data. Founded just 15 months ago with a €9 million pre-seed round, Prior Labs specializes in tabular foundation models — AI systems designed to analyze structured business data. Its TabPFN-2.6 model tops the TabArena benchmark, delivering results in seconds that would take classical AutoML methods roughly four hours to produce. The startup's scientific advisors include renowned AI researchers Yann LeCun and Bernhard Schölkopf, while founders Frank Hutter, Noah Hollmann, and Sauraj Gambhir will continue to lead the unit.
SAP plans to integrate Prior Labs' technology into its AI Core services, Business Data Cloud, and the Joule AI assistant. The acquisition follows the earlier July purchase of Dremio, an open data lakehouse platform provider, as part of a broader push into agentic AI capabilities. These moves build on a restructuring program announced in early 2024, originally targeting 8,000 positions but later expanded to as many as 10,000, all aimed at sharpening the company's focus on business AI.
Organizational Overhaul and Balance Sheet Risks
A new leadership structure for product and engineering took effect on July 1, reorganizing operations around the SAP Business AI Platform and the Autonomous Suite. The restructuring is designed to streamline decision-making and accelerate the shift toward AI-driven products, but it also adds execution risk at a time when the market is already skeptical about the near-term payoff from such heavy investment.
On the balance sheet, some analysts have flagged concerns about goodwill. With roughly €29 billion in goodwill — representing about 40% of total assets — SAP has so far avoided impairment charges despite the ongoing restructuring. Should growth continue to decelerate, that could become a risk factor.
Insider Buying and Analyst Confidence
Despite the stock's decline, there are signs of conviction from both management and independent analysts. Morningstar's Rob Hales reaffirmed his fair value estimate of €265.00 on July 17, assigning a five-star rating and citing SAP's broad economic moat, though he noted near-term headwinds from storage constraints and energy costs. That valuation implies more than 100% upside from current levels.
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On the insider front, CFO Dominik Asam and board member Sebastian Steinhäuser made six- and low-seven-figure share purchases earlier this year at prices of €169.20 and €174.00 respectively — well above today's trading level. The company also completed the first tranche of its €10 billion buyback program in early April, repurchasing 16,280,097 shares at an average price of €161.16 for a total of roughly €2.6 billion.
Whether those levels prove prescient or premature will depend heavily on what the company reports Thursday evening. The market is looking for evidence that SAP's billion-euro AI wager is already generating operational momentum — or confirmation that the caution priced into the stock is justified. With volatility running at elevated levels, the reaction to the numbers is likely to be sharp in either direction.
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