SAP Gets a Vote of Confidence from Jefferies But the Chart Has Other Ideas

SAP shares clawed back 3.2% on Friday to €145.84, but the relief rally does little to mask the deeper troubles afflicting Europe’s largest software company. The stock has lost nearly 30% of its value since the start of the year, and while analysts are turning more upbeat after the company’s Sapphire conference in Orlando, the technical picture remains grim.

Analysts See a Buying Opportunity

Jefferies was the most prominent voice to shift its stance. Analyst Charles Brennan upgraded SAP to “Buy” on Sunday, keeping a €230 price target that implies nearly 60% upside from current levels. He described the product updates at Sapphire as a logical evolution of the company’s strategy, particularly the gradual maturation of its artificial intelligence capabilities and their deeper integration into the core business.

Armin Kremser of DZ Bank seconded the positive view, noting that SAP is positioning itself as the central AI and data platform in the ERP market. He cautioned that AI is currently driving customer adoption rather than immediate revenue gains, but argued that the long-term bet on an “autonomous enterprise” model strengthens SAP’s competitive moat.

Barclays, UBS and Goldman Sachs also retain buy ratings, with price targets ranging up to €276. The chasm between these analyst expectations and the market’s verdict is striking.

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

A Stock Trading Near Its Floor

The price action tells a different story. Friday’s close at €145.84 is barely 6% above the 52-week low of €137.62. The 200-day moving average sits around €195, a level the stock hasn’t seen in months. The relative strength index has climbed to 92.7 — firmly in overbought territory — suggesting the short-term bounce may already be exhausted.

Technicians are watching the €144 mark as a key support level. A clean hold could open the door to €150, but any break below would risk another leg lower toward the yearly trough.

Building the Data Layer for AI

Operationally, SAP is moving aggressively to execute its strategy. The acquisition of master data management specialist Reltio was completed on May 7, and the purchase of data platform Dremio is slated for the third quarter. These deals, along with the earlier takeover of Prior Labs, are designed to create a unified data pipeline that can feed AI models with clean, structured enterprise information.

CEO Christian Klein used the Sapphire stage to highlight the momentum in the company's cloud business. The current cloud backlog grew 25% on a currency-adjusted basis, while cloud revenue rose 27%. Klein also pointed to surging demand for enterprise AI tools.

Shareholders received a dividend of €2.50 per share, a 6.4% increase from last year, approved at the annual meeting on May 5. Given the heavy capital spending on AI transformation, the payout hike signals management’s confidence in cash flow generation.

SAP at a turning point? This analysis reveals what investors need to know now.

The Bigger Picture: Sector Rotation and Rising Yields

SAP’s gain on Friday came amid a broader market rotation that punished cyclical industrials while rewarding defensive names. Siemens and Heidelberg Materials dropped sharply despite strong quarterly results, while Munich Re and Hannover Re advanced on upgraded guidance and buyback programs.

Rising US Treasury yields — 30-year bonds touched 5% for the first time since 2007 — are keeping pressure on richly valued industrial stocks. Insurers and software companies with predictable earnings are drawing capital instead. As long as this yield backdrop holds, SAP’s stock may continue to struggle even as its fundamentals improve.

For now, the market is pricing in skepticism that SAP’s AI push will translate into near-term profit acceleration. The analysts are betting on a multi-year payoff. The chart suggests patience will be tested first.

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