SAP’s Radical Cost Surgery and Cloud Momentum Collide Ahead of Make-or-Break Earnings
Published on 07/03/2026 at 12:33 | Redaktion boerse-global.de
SAP is scrambling to reshape its cost base and accelerate its artificial intelligence bet, yet its share price keeps sliding. The stock fell again on Friday, shedding between 2.0% and 2.4% depending on the data feed, ending the session at either €139.06 or €139.64. Either way, the software group is now trading dangerously close to its 52-week low of €130.80, a level first plumbed at the end of June. The year-to-date loss stands at roughly 31%, while the peak-to-trough decline from the 52-week high approaches 46-47%.
Under the internal codename “Project Fuji,” Chief Executive Christian Klein has taken direct command of the company’s AI development efforts. The accompanying belt-tightening is sweeping: travel budgets have been slashed, new hires outside the AI domain frozen, and a workforce reduction of up to 10,000 roles initiated. The goal is to defend the operating margin against the soaring costs of building out new AI infrastructure. Klein is betting that a fleet of more than 200 planned AI agents, dubbed the “Autonomous Suite,” will eventually deliver enough efficiency gains to justify higher pricing or increased usage volumes from customers.
Those customer wins, meanwhile, are piling up. SAP announced that four new global accounts — JYSK, GBM, the DIFARE Group and the Plastilene Group — have committed to the SAP Cloud ERP Private edition. Under a deepening partnership with IBM, these clients will run their business processes on virtual servers hosted by Big Blue, aiming for a secure and scalable IT setup. SAP’s cloud migration program, led by Lalit Patil, emphasizes a smooth transition that allows hybrid models and minimal disruption. An IBM study cited by the company claims that enterprises integrating AI can boost returns by as much as 27% and significantly lower total operating costs.
Should investors sell immediately? Or is it worth buying SAP?
The bull case rests on the operational momentum. SAP’s cloud order backlog grew 25% on a currency-adjusted basis, and demand for the S/4HANA transformation remains strong. A €2.6 billion share buyback programme, set to run until the end of July, is expected to provide a floor for the stock. From a technical perspective, the relative strength index (RSI) at 46.9 suggests a neutral reading, while the €130.80 low could act as a support level for a potential summer recovery.
But the bearish arguments are equally forceful. Critics point to the immense capital outlay required for the AI push, which is eating into profitability. Broker estimates for the gross margin in the second half of 2026 have already been trimmed to 72.8%. The market has been rattled by Oracle’s aggressive investment announcements, which have cast a shadow over the entire software sector. Technically, SAP’s shares are trading almost 23% below their 200-day moving average, a gap that signals persistent weakness. As long as that moving average remains intact as resistance, fresh selling waves cannot be ruled out.
Market participants are no longer content with revenue growth alone; they want proof that the expense discipline is translating into expanding operating margins. The next big test comes on July 23, when SAP reports its quarterly earnings. Management has so far guided for an operating profit between €11.9 billion and €12.3 billion for the full year. With volatility already extreme, any deviation from that range is likely to trigger outsized price swings.
The immediate crossroads is clear: if the €130.80 support holds, a consolidation phase could develop. If it breaks, a swift drop towards new multi-year lows is on the cards. The earnings call will be the catalyst that decides which path SAP’s stock takes.
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