SAP’s AI Returns Are Rising, but the Stock Keeps Falling
Published on 07/17/2026 at 21:31 | Redaktion boerse-global.de
SAP’s latest research into artificial intelligence returns should be a reason to cheer. Yet the German software giant’s shares continue to slip as broader market currents and analyst scepticism override the positive data. The stock traded at €137.82 on Friday, down 2.3% on the day and barely 5% above its 52-week low of €130.80. A UBS downgrade of the price target and a rotation out of software into hardware have left investors focused on the macroeconomic headwinds rather than internal progress.
A joint study from SAP and Oxford Economics, released on 15 July, puts the average global return on investment for corporate AI projects at 21%, up sharply from 16% a year earlier. In Germany the figure reaches 24%. The report highlights “Agentic AI” – autonomous agents capable of executing complex tasks within ERP systems – as a particular growth area. SAP has already embedded more than 50 such agents into its core processes. Yet the gap between ambition and readiness is stark: 83% of managers see high potential in agentic AI, but only 3% feel prepared to deploy it. For SAP, that governance shortfall represents a consulting and integration opportunity.
The stock’s recent slide, however, owes little to SAP’s own business metrics. A pronounced sector rotation has been underway, with money flowing into chipmakers and hardware vendors such as Nvidia and TSMC after reports of heavy infrastructure spending by US rival Oracle. The sell-off was exacerbated by IBM’s disappointing quarterly results, which saw revenue of $17.2 billion fall short of expectations. IBM’s management pointed to customers redirecting IT budgets towards servers, storage and AI infrastructure – a trend that has punished traditional enterprise software names.
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UBS analyst Michael Briest added to the pressure on Friday by slashing his SAP price target from €205 to €164, a cut of more than 20%, while maintaining a buy rating. Briest cited the slow adoption of AI agents among SAP’s largest clients, noting that the complexity of legacy ERP systems is delaying monetisation of the company’s AI strategy. Despite the lowered target, the new level still implies roughly 19% upside from the current share price. All other analyst targets remain above the market price, and the stock’s forward P/E has contracted to around 22 – no longer expensive against its history, but still at a premium to the broader market.
To protect margins during the costly AI transformation, SAP’s management has imposed a tight cost-control regime since the beginning of July. Internal reports confirm a hiring freeze for non-AI-related roles and a ban on non-essential business travel. The belt-tightening is intended to stabilise free cash flow after a €408 million settlement payment to Teradata weighed on first-quarter results. Meanwhile, a share buyback programme of up to €2.6 billion continues, providing a floor for the stock.
Geopolitical factors have also weighed on sentiment. The intensifying conflict in the Middle East has pushed energy costs higher, hitting the manufacturing sector – a core customer base for SAP’s enterprise software. The stock’s annualised volatility has climbed to 36.43%, a level that signals heightened uncertainty among investors.
All eyes are now on 23 July, when SAP will report its second-quarter and first-half results after the market close. The quiet period is in effect, so management has refrained from commenting on current trading. The cloud order backlog and the outlook for the second half will be the key metrics. Whether the fundamental evidence from this week’s AI study can halt the rotation remains to be seen, but the next decision point is already set for Thursday evening.
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