SAP Balances Cheaper AI Models Against User Demands for Cost Clarity
Published on 11/02/2026 at 15:02 | Editorial boerse-global.de
SAP used its TechEd stage in Berlin on Friday to roll out additional AI capabilities for the SAP Business AI Platform, including a new orchestration layer designed to coordinate multi-step workflows. The feature builds on the agent and governance tools unveiled at the same event, widening the scope for embedding AI in enterprise software while keeping its use under control.
The technical reveal drew a qualified welcome from the Deutschsprachige SAP-Anwendergruppe (DSAG), the German-speaking user group, which on 27 October endorsed the direction of travel but pressed for greater clarity on downstream costs and on how the new tools fit into hybrid IT environments. That distinction matters for investors: extra functionality does not by itself answer the questions of cost and integration, and the user group's demands concern practical deployment rather than mere availability.
Efficiency Gains on SAP's Own Books
On the cost side, SAP is pursuing a concrete plan of its own. Chief Financial Officer Dominik Asam told Reuters on Wednesday that the company is replacing expensive AI models with cheaper alternatives across parts of its product range, a move expected to deliver efficiency gains of more than €2 billion over the next two years. That expectation applies to SAP's internal efficiency and should not be read as a commitment to lower prices for customers. For shareholders it creates two separate yardsticks: the economic benefit of model substitution for SAP itself, and the cost predictability that clients are demanding.
The AI expansion is unfolding against a growing cloud business. In third-quarter 2026 results published roughly two weeks ago, SAP reported cloud revenue up 26%, with cloud ERP suite revenue climbing 29%. The company guided cloud revenue and combined cloud and software revenue to the upper end of its previously stated ranges — an upgrade within the existing forecast framework rather than evidence of additional revenue in its own right.
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Sector Jitters and Raised Price Targets
Sentiment around the stock has been shaped by forces beyond SAP's own reporting. On Thursday the shares came under pre-market pressure after disappointing quarterly updates from ServiceNow and Fortinet weighed on the software sector. Media reports said the two US companies' results fuelled fears that artificial intelligence could squeeze established software business models — a concern that swept across the sector and caught SAP in its wake.
That sector-wide worry is distinct from SAP's own results and guidance: a broad fear does not establish a corresponding deterioration in SAP's business. The signals are not necessarily contradictory. Analyst reactions addressed SAP's business development, while the subsequent pressure reflected doubts about AI's longer-term effect on the software industry. Price targets remain assessments, not promises about future share performance.
Order Book Provides the Operational Counterweight
The operational counterweight comes from the cloud backlog. SAP reported a current cloud backlog of €24.1 billion, up 28% — or 26% at constant currencies. Separating expectations about AI-driven disruption from the demand SAP has actually reported is therefore the key exercise for investors.
Capital returns continue alongside. Under its ongoing buyback programme, SAP repurchased 42,848 of its own shares in the week of 19 to 23 October, according to a notice dated 27 October. Buybacks are a standalone capital measure, not proof against the risks of technological change; the cloud outlook and its execution remain the more important test of the operating story.
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Sovereign Cloud in Focus
Beyond costs and integration, the DSAG called for a clear perspective on sovereign cloud in Germany, Austria and Switzerland. On Wednesday SAP and NTT announced a planned collaboration on sovereign cloud and SAP Business AI. As a first step, the two companies intend to link SAP Sovereign Cloud On-Site with infrastructure and operational services managed by NTT. The partnership is announced, not described as implemented.
The next confirmed date for checking how these strands develop is 21 January 2027, when SAP publishes results for the fourth quarter and for fiscal 2026. Until then, the split remains: SAP has put a concrete figure on its own expected efficiency gains, while on the customer side the focus stays on transparent follow-on costs and dependable integration.
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