SAP’s €2.6 Billion Buyback Resumes as Twin AI Acquisitions Aim to Rewrite the Cloud Narrative

The trading lock-up is over, and SAP is back in the market to repurchase its own shares — but the stock it’s buying sits 45% below its 52-week peak, a stark reminder of the disconnect between operational strength and market sentiment.

The mandatory pause around the annual general meeting and ex-dividend date ran from April 27 through May 8. As of Friday, that restriction has lifted, freeing SAP to execute the latest tranche of its buyback program. The company has earmarked up to €2.6 billion for this round, which must be completed by July 27, as part of a broader €10 billion framework running through the end of 2027.

The timing is anything but comfortable. Shares are trading around €150, just 7% above the April low of €139.12. Since the start of the year, the stock has shed roughly 26% of its value, a decline that has left it well below its 200-day moving average.

Cloud Growth Meets a Softer Outlook

On the operational front, the numbers tell a more encouraging story. First-quarter cloud revenue climbed 27% to €5.96 billion, with cloud ERP suite sales jumping 30%. The full-year forecast remains intact: SAP expects cloud revenue between €25.8 billion and €26.2 billion, alongside free cash flow of approximately €10 billion.

Should investors sell immediately? Or is it worth buying SAP?

What has spooked investors is the second-quarter outlook. Management has flagged a deceleration in cloud growth as one-time tailwinds from Q1 fade. At the same time, the pace of decline in software-support revenue is expected to accelerate as more customers migrate to the cloud — a structural shift that, while positive long-term, creates near-term headwinds.

A Double Acquisition Play

While the buyback signals confidence in the current valuation, SAP has been busy reshaping its competitive position through M&A. In early May, the Walldorf-based software giant announced two strategic acquisitions in quick succession: data specialist Dremio and AI startup Prior Labs.

The deals fit into a clear architectural vision. Together with the Reltio acquisition announced in March, SAP is building an end-to-end data pipeline. Reltio cleanses the data, Dremio unifies access across disparate sources without requiring migration or conversion, and Prior Labs supplies the AI models that can predict business outcomes such as payment delays or customer churn.

Prior Labs, founded in 2024 and based in Freiburg, Germany, is a standout. The startup specializes in tabular AI models — algorithms designed to work with structured business data. SAP plans to invest over €1 billion in the coming four years, aiming to turn Prior Labs into a leading AI laboratory for structured data.

Dremio, meanwhile, was valued by investors at $2 billion in 2022. SAP has not disclosed the purchase price for either acquisition. Both deals are expected to close by the third quarter of 2026.

SAP at a turning point? This analysis reveals what investors need to know now.

Sapphire Looms Large

The next major catalyst arrives next week. From May 11 to 13, SAP hosts its Sapphire conference in Orlando. CEO Christian Klein is expected to unveil a redesigned version of the company’s AI assistant, Joule. The company has been candid that large-scale enterprise AI deployment still faces hurdles — agents often fail to fully understand business data and processes.

Separately, SAP has struck a deal with S3NS to deliver a sovereign cloud solution in France, expected to go live in the second half of 2026. The move underscores SAP’s push to capture cloud growth in heavily regulated markets.

The Sapphire event will test whether Klein can shift the narrative from a cautious Q2 outlook to a compelling AI-driven growth story. With the stock nursing deep losses and the buyback clock ticking, the stakes are high.

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