SAP Faces a Double Test: EU Concessions and an AI-Fueled Acquisition

The German software giant is navigating a turbulent week on multiple fronts. While investors brace for first-quarter earnings due late Thursday, SAP is simultaneously pushing forward with a strategic acquisition and trying to placate European regulators.

The stock has been under severe pressure, shedding nearly 30% of its value since the start of 2026. On Thursday, shares slid by almost 6% in Frankfurt to €140.52, dragging the company dangerously close to its 52-week low. The sell-off was triggered by a sharp decline in US peer ServiceNow, which lost 17% after flagging delayed contracts in the Middle East that are hampering subscription growth.

Building a Data Foundation for Joule

Just hours before reporting quarterly results, SAP unveiled plans to acquire Reltio, a privately held US specialist in master-data management. The technology is designed to consolidate data from disparate applications into a single, unified profile — what the industry calls a "golden record." For SAP, this capability is essential to feeding its AI assistant, Joule, with clean, enterprise-wide data.

No purchase price was disclosed, though Reltio was valued at up to $2 billion in funding rounds earlier this year. The deal is expected to close in the second or third quarter, pending antitrust approval. SAP has indicated that Reltio will continue to be sold as a standalone product for the foreseeable future.

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Brussels Investigation Nears Resolution

Alongside the acquisition, management is working to resolve a long-running EU probe into whether SAP stifled competition in maintenance services for older software licenses. The company has offered concessions, including greater customer choice and the elimination of certain fees. If no objections emerge from the market, the European Commission could close the case without imposing a fine.

The regulatory overhang has been a persistent drag on sentiment, compounding broader concerns about geopolitical tensions. US-China trade frictions are weighing on licensing revenue, while industrial clients globally are delaying large IT spending commitments.

Earnings and the Cloud Metric That Matters

All eyes are now on the quarterly report due after the market close. Analysts expect revenue of €9.56 billion for the first quarter, with earnings per share climbing to €1.64. The critical number, however, will be the cloud order backlog — a forward-looking indicator that investors view as the truest test of SAP's transition to subscription-based software.

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CEO Christian Klein has reiterated the company's full-year target of roughly €26 billion in cloud revenue, representing currency-adjusted growth of up to 25%. A €2.6 billion first tranche of an ongoing share buyback program is providing some support, though it has done little to stem the broader decline.

The market's reaction on Friday will hinge on two factors: whether SAP confirms its annual guidance, and whether management offers clarity on the EU proceedings. Without concrete answers, the stock risks sliding to new lows for the year.

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