SAP Splashes €1 Billion on AI Startups While Clamping Down on Costs Ahead of Q2 Results
Published on 07/19/2026 at 10:01 | Redaktion boerse-global.de
The Walldorf-based software giant has been engaged in a striking balancing act in recent weeks, pouring billions into artificial intelligence acquisitions while simultaneously slashing discretionary spending. Non-essential business travel has been suspended and hiring policies tightened as of July 1, part of a cost-discipline program designed to shore up the operating margin during what the board describes as an ongoing AI transformation. The moves come as the company’s stock sits barely above a 52-week low and analysts remain sharply divided over whether the technology bet will pay off.
On the acquisition front, SAP completed the purchase of Prior Labs on July 17, a startup specializing in tabular foundation models. The deal value exceeded €1 billion, with more than $500 million paid in cash. Prior Labs will operate as a standalone brand and its technology is slated for integration into SAP’s Business Technology Platform, expanding the company’s corporate AI toolkit. The deal marks the second sizable AI-related buyout in as many weeks: the data-lakehouse provider Dremio was acquired on July 6, with the aim of strengthening the data architecture behind so-called agentic AI applications — software that independently handles tasks within enterprise workflows.
There has also been positive regulatory news. The European Commission formally closed its long-running antitrust investigation into SAP’s maintenance and support policies earlier this month, levying no fine. In return, SAP committed for a decade to certain conditions, including a pledge not to charge reactivation fees on on-premise systems. Michael Bloch, board member of the German-speaking SAP user group DSAG, welcomed the settlement, arguing it gives customers more flexibility when choosing their maintenance strategy.
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The positive developments, however, have failed to lift the share price, which remains under pressure. On Friday, the stock closed at €138.50, a decline of 1.81% on the day and a year-to-date loss of 33.53%. The price is now 4.30% below its 50-day moving average and just 5.89% above the recent 52-week trough of €130.80 reached in late June.
Wall Street’s view of SAP has become increasingly fractured. Michael Briest of UBS slashed his price target from €205 to €164 on July 15, though he kept a “Buy” rating. He cited the growing complexity of monetizing AI agents in sprawling ERP environments as a key reason for the downgrade. The bearish call clashed with optimism from Bernstein, which reaffirmed a €276 target and “Buy” rating on July 16, and Morningstar analyst Rob Hales, who maintained a €265 fair value estimate and “Buy” stance on July 17 while flagging macro risks from the Iran conflict and rising energy costs. JPMorgan took a middle ground, reiterating a “Neutral” rating and a €175 target on July 15. The wide spread — from €164 to €276 — underscores the deep uncertainty about how quickly SAP can convert its AI investments into revenue.
Operationally, the company also had to contend with security issues. During the monthly patch day on July 14, SAP released fixes for 16 vulnerabilities, three of which were rated critical. The flaws affected NetWeaver, Commerce Cloud, and the AppRouter component.
All eyes are now on July 23, when SAP is due to publish second-quarter and first-half results for 2026. The earnings release is scheduled for 22:05 MESZ, followed by a conference call with analysts at 23:00 MESZ. The numbers will provide the first substantive look at whether the billions poured into Prior Labs and Dremio are already translating into operational momentum. If the monetization of AI tools shows tangible progress, the more bullish analyst calls could regain traction. If the effects fall short, further target reductions of the kind already delivered by UBS may follow.
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