SAP's AI Ambitions Face a Customer Reality Check

As SAP prepares to report first-quarter earnings this Thursday, the software giant finds itself at a critical juncture. Its stock has tumbled roughly 25% since the start of the year and sits nearly 45% below its peak from last June. The immediate financial figures, while important, are overshadowed by a deeper strategic challenge: convincing its vast customer base to embrace its proprietary artificial intelligence tools.

Analysts anticipate solid headline numbers for the quarter ending March 2026. Consensus estimates point to revenue of 9.56 billion euros, representing growth of about six percent year-over-year. Earnings per share are forecast at 1.64 euros, up from 1.52 euros in the prior-year period. Cloud revenue is expected to show a stronger increase of approximately 18 percent.

The true test, however, lies in the cloud backlog. A miss on this key metric in January rattled investors, and CEO Christian Klein and CFO Dominik Asam must now demonstrate that was an anomaly, not a trend. The market will also scrutinize the operating margin for any signs that aggressive cloud investment is eroding profitability.

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

Beneath these financial metrics simmers SAP's core dilemma with AI. The company has aggressively embedded its "Joule" AI from a simple assistant into a full-fledged agent platform, now integrated within 35 different SAP solutions. It boasts of concrete efficiency gains, such as a new specialist agent that can reduce manual account reconciliation time by up to 80%. Yet, adoption remains stubbornly low. A recent survey by the German-speaking SAP user group (DSAG) revealed a mere three percent of customers are using Joule productively in their operations, with most preferring external solutions like Microsoft Copilot.

This reluctance stems from a fundamental architectural choice. Joule operates exclusively in the cloud, deliberately excluding customers who run software on their own premises. With support for the legacy core system ending in 2027, over 10,000 global customers face a forced migration decision. SAP is using advanced AI features as a lever to accelerate this shift to its cloud platform, a strategy that is meeting customer resistance.

In a parallel strategic move, SAP has announced the acquisition of Reltio, a provider of master-data-management software. The purchase price was not disclosed, and the deal is expected to close in the second or third quarter of 2026. This acquisition aims to address a critical weakness in SAP's data strategy. AI applications are only as effective as the data they access, and Reltio's platform consolidates scattered corporate data into a unified set. This technology is intended to bolster SAP's Business Data Cloud, a service launched in February 2025 that has struggled with acceptance. The same DSAG survey found that 83 percent of its members were barely or not at all familiar with the platform.

The earnings release kicks off a busy period for SAP shareholders. A virtual annual general meeting is scheduled for May 5, where investors will vote on a proposed dividend of 2.50 euros per share. The ex-dividend date would be May 6, with payment following on May 8. Shortly after, on May 13, management will present mid-term targets at the Financial Analyst Conference in Orlando, held alongside the customer event SAP Sapphire. This forum will offer the next opportunity for the company to articulate how its costly AI and data integration efforts will translate into sustainable growth and customer value.

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