SAP’s Quiet Period Masks Ambitious AI Push and Carbon Software Launch as Shares Hover Near Floor

SAP has entered its pre-earnings quiet period with the stock nursing a roughly 34% year-to-date loss and trading at €132.18 — just €1.36 above the 52-week trough of €130.82. The software giant will report second-quarter results on July 23 at 22:05 CET, and the mood ahead of that release is anything but optimistic. The shares have slid 28% below their 200-day moving average of €183.79, and the relative strength index sits at 35.2, dangerously close to the oversold threshold of 30.

Behind the scenes, however, SAP is pulling out all the stops. The company is wrapping up a €2.6 billion share buyback tranche set to end this month, part of a broader €10 billion repurchase plan that runs through 2027. That predictable demand has done little to arrest the decline so far, but management is also betting heavily on growth through two strategic acquisitions: data-lakehouse firm Dremio and AI laboratory Prior Labs. SAP is pouring €1 billion into Prior Labs over four years to develop specialised models for tabular data, with the goal of stitching together internal and external data sources. Both deals are expected to close in the coming months, Dremio’s by the third quarter of 2026, pending regulatory approval.

On the product front, SAP this week unveiled an integrated solution for the EU’s Carbon Border Adjustment Mechanism (CBAM). Built on the SAP Sustainability Footprint Management and Green Ledger platforms, the tool automates emissions tracking, certificate management and CBAM liability booking. With companies scrambling to document CO2 footprints across supply chains, the ESG software niche is growing — but the market has yet to reward SAP for these advances.

Analyst sentiment remains cautiously bullish despite the share price rout. UBS sees a slightly improved business environment in the second quarter, though margin expansion is expected to be softer than in the first three months of the year. Analyst Michael Briest maintains a buy rating with a €205 price target. Jefferies also keeps a buy but recently slashed its target from €230 to €210, citing broad scepticism toward the European software sector and mounting competition in artificial intelligence. That competitive pressure extends beyond AI to the core S/4HANA migration business, where third-party consultancies such as Accenture, Capgemini and NTT DATA are chipping away at SAP’s lock on existing customers. The support deadline for the legacy ECC system at the end of 2030 forces clients to act, but rivals are easing the transition with AI-powered automation.

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

SAP itself plans to release dedicated migration tools for large customers in the third quarter of 2026. It is also positioning its “Sovereign by Design” offerings as a selling point amid US export restrictions on AI models — a geopolitical argument that carries increasing weight in Europe.

A structural tailwind may eventually come from Germany’s underspending on software. Deutsche Bank chief economist Robin Winkler notes that the country invests less than 1% of GDP in software, compared with roughly 4% in Sweden. If German mid‑cap companies finally start catching up, SAP could be a prime beneficiary — but that shift has yet to materialise in the share price.

All eyes are now on the July 23 earnings call. SAP needs to deliver strong cloud growth and tight cost control. A disappointing outlook would likely send the stock below the €130.82 support level, while a positive surprise could drag the RSI out of oversold territory and give the beaten-down shares a much-needed reprieve.