SAP Heads Into Earnings with a €1B AI Bet, a Closed EU Probe, and a Stock Under Siege
Published on 07/20/2026 at 14:32 | Redaktion boerse-global.de
Wall Street will get its first real look at whether SAP’s billion-euro pivot into tabular artificial intelligence is gaining traction when the German software giant reports second-quarter results on Thursday. The company has just sealed its acquisition of Freiburg-based startup Prior Labs, committing more than €1 billion over four years to integrate its so-called tabular foundation models—a breed of AI tailored to the structured business data that flows through enterprise-resource-planning systems. Yet the market remains unconvinced. SAP shares have shed more than 34% since the start of the year, slipping to €137.06, as a series of headwinds has erased most of the valuation premium built up during the earlier AI hype.
The timing of the deal could hardly be more delicate. Customers are reallocating budgets toward cybersecurity and cloud infrastructure, crimping spending on traditional on-premise software. The IBM profit warning that rattled the sector last Friday only amplified those concerns, pushing SAP’s stock down 1.81% to €138.50 before further declines this week. Now, with the stock trading just 5.9% above its 52-week low of €130.80, the upcoming earnings release has become a defining moment.
The Cloud Backlog Is the Real Bellwether
Analysts are zeroing in on the current cloud backlog, which they see as the most reliable indicator of momentum. Consensus estimates call for cloud revenue growth of roughly 22% in the second quarter, or about €6.26 billion. The critical threshold lies at a growth rate of 25%: anything below that level would reignite fears that SAP’s core software business is losing ground as customers tighten their belts. On the profitability side, the market expects adjusted EBIT of €2.88 billion, and investors will be listening closely for any revision to the full-year cloud revenue guidance of €25.8 billion to €26.2 billion.
A Few Bright Spots—But Not Enough to Lift the Sentiment
SAP has not been idle on other fronts. The European Commission dropped a long-running cartel investigation on July 9, removing a regulatory overhang that had been weighing on the stock. And the company is simultaneously running a share buyback programme of up to €2.6 billion, set to expire on July 31, a move that signals management’s confidence in its own valuation even as it splashes out on acquisitions.
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But those positives have been overshadowed by the broader sector gloom. The 50-day moving average currently sits at €144.72, well above the current price, while the 100-day average is also acting as a ceiling. JPMorgan recently downgraded SAP to Neutral, warning that software budgets are being squeezed by rising spending on cybersecurity and cloud infrastructure. The bank’s €175 price target now looks distant, though it still implies some upside from current levels.
Why the Tabular AI Bet Could Still Pay Off
SAP’s strategy with Prior Labs is more nuanced than a generic AI land grab. Instead of chasing the crowded market for large language models, the company is betting on models designed exclusively for tabular data—the spreadsheets, transaction logs and supply-chain tables that are the lifeblood of its ERP systems. SAP argues this is the largest untapped opportunity in enterprise AI. If the technology can translate into measurable efficiency gains for clients, it could accelerate the shift to the cloud and justify the hefty price tag.
The trend toward digital sovereignty in Europe may provide additional wind. Reports indicate that large corporates such as Airbus are moving critical workloads away from US hyperscalers to European cloud providers—a dynamic that could benefit SAP’s own cloud platform. Meanwhile, the competitive landscape for SAP HANA workloads is heating up among infrastructure giants: AWS now offers instances with up to 34 terabytes of memory, and Microsoft Azure is certifying clusters of comparable size, underscoring how much storage-intensive SAP applications have become a battleground for the hyperscalers.
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What Thursday’s Numbers Will Reveal
Whether the stock can stabilize depends on two things. First, the cloud backlog must show that the 25% growth trajectory is intact, or at least that any slowdown is temporary and linked to the cybersecurity shift rather than a loss of competitive edge. Second, SAP needs to demonstrate that its heavy investment in Prior Labs is not undermining profitability goals. If the company confirms its full-year cloud forecast and points to early synergies from the integration, a recovery toward the €140 area looks plausible. But a miss on the backlog could accelerate selling pressure and put the 52-week low back in play.
The results are due after the US market close on Thursday, July 23, at around 22:05 CEST. For a stock that has already shed a third of its value this year, the stakes could not be higher.
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