SAP's Dremio Purchase Is Done, but the Hardest Questions Loom Over 2027 and AI Monetization
Published on 07/08/2026 at 05:22 | Redaktion boerse-global.de
The clock is ticking toward a deadline that will define SAP's future — the end of 2027, when mainstream support for its legacy ECC systems expires. For customers, that means a forced migration to S/4HANA within roughly 18 months. For SAP, it's a guaranteed revenue pipeline in theory, but the stock has yet to price in that certainty. Instead, the shares have been hammered by skepticism over whether the company can convert its AI vision into tangible profits fast enough to offset shrinking license margins.
SAP completed its acquisition of Dremio on July 6, bringing the data lakehouse specialist aboard ahead of the originally planned third-quarter close. The technology allows users to combine data from SAP and non-SAP systems in real time without moving or transforming it — a capability aimed at speeding up analytics and AI workloads. The move dovetails with SAP's broader push into data and artificial intelligence, following the earlier purchase of master-data-management firm Reltio. Financial terms of the Dremio deal were not disclosed. Yet the market's reaction was muted: the stock closed the day at €143.18, up just 1.65% on the session, but still nursing a year-to-date loss of 29.12% and a 12-month decline of 45.54%.
Behind the indifferent price action lies a deepening cost-cutting campaign. SAP is throttling hiring and business travel, approving new roles almost exclusively in central AI functions. Internal events without an AI link are seeing their travel budgets slashed, and the company is scrutinizing supplier spending. JPMorgan analyst Toby Ogg reads the austerity measures not as discipline but as a sign of heavy investment needs, keeping his rating at "Neutral" with a €175 target. The strategic pressure is also evident in a July 1 restructuring that split the Business AI Platform and Autonomous Suite into separate board-level units — a bid to show agility that the market so far sees as complexity.
Should investors sell immediately? Or is it worth buying SAP?
Technically, SAP remains deep in bear territory. The 50-day moving average sits at €146.19 and the 200-day at €180.16, with the 20.52% gap between them underscoring a persistent downtrend. The stock is 9.46% above its 52-week low of €130.80 from June 25, but still 46.17% below last July's record of €266.00. The relative strength index stands at 51.6, a neutral reading that offers no clear directional signal, while annualized volatility of 46.04% tells a story of lingering unease. Management is unlikely to provide fresh color on the Dremio integration or the cost program before second-quarter and first-half results are released on July 23 at 22:05 CET — the quiet period before that date is in full effect.
Operationally, SAP's cloud backlog reached €21.9 billion, a robust growth metric that has done little to shift sentiment. The market is fixated on a perceived monetization gap in artificial intelligence: heavy investment in "Business AI" and "Agentic AI" systems designed to run business processes autonomously has yet to produce the earnings uplift needed to offset erosion in the legacy license business. The company's market capitalization of €163.20 billion remains impressive in absolute terms, but it represents a stark comedown from the ambitions that once valued SAP as Europe's unassailable AI winner.
The window to prove the strategy is narrow. Every delay in customer migration projects or shortfalls in consulting capacity will amplify doubts that SAP can convert the 2027 deadline into a smooth revenue stream. The upcoming earnings call on July 23 offers the first opportunity for management to explain how cost-cutting and multi-billion-euro AI ambitions can coexist — and to show that the Dremio acquisition is more than a data integration play, but a piece of the answer to the most pressing question hanging over the stock: can SAP make AI pay before the old model fades?
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