- Company name
- SAP
- Sector
- Enterprise software
- About
- SAP sells enterprise resource planning (ERP) software. Companies use this software to run finance, supply chain, and other core operations. SAP used to sell this software as a one-time license. SAP now sells most of it as a cloud subscription, priced per user. The main cloud product is S/4HANA Cloud, sold as RISE to existing customers and GROW to new customers.
- Thesis
- Investors fear that AI agents will let companies cut the paid user seats SAP's cloud software is priced around. This fear drove a sharp SAP selloff in early 2026. That happened even as SAP's April 2026 API policy pushed outside AI agents toward SAP's own Business Data Cloud or Joule. The policy discourages those agents from running their own calls against SAP data. The gap can close if SAP keeps posting strong cloud growth without leaning only on seat count. In the second quarter of 2026, cloud revenue grew 24% at constant currency and the cloud backlog grew 26%. That is evidence growth had not yet slowed the way the seat-count fear implies. The new API policy still faces pushback from DSAG, the largest SAP user group, over unclear terms. So the routing strategy is not yet proven and could draw more customer or regulatory pushback instead of new revenue. In 2027, many legacy on-premises customers must decide whether to move to the new cloud product. That decision will show whether the lock-in argument holds up. The next check comes at Q3 2026 earnings on October 21, 2026. A fuller picture is likely over the next two to four quarters, as the API policy and the 2027 upgrade cycle play out.
- Risks
- SAP prices its main cloud product per user. If AI agents cut a customer's headcount, SAP's revenue from that customer can fall at renewal.
In 2027, many older customers must decide whether to upgrade to the new cloud product. This can bring more revenue, or push some customers to a competitor instead.
SAP's April 2026 API policy has drawn public criticism from DSAG, the largest independent SAP user group, over unclear terms and unclear coverage. Analysts warn it can raise customer lock-in and integration cost. If the backlash grows, it could slow adoption of Joule or invite regulatory scrutiny, which would weaken the case that the policy strengthens SAP's moat.
SAP does not publish user-count data. This makes it hard to confirm whether the risk above is already happening.
SAP pays a German dividend withholding tax. Only a non-registered account gets a full tax credit for this. Other account types lose part of the dividend to tax.
- Recent events
- 2026-07-23: SAP reported Q2 2026 results. Cloud revenue was €6.281 billion, up 24% at constant currency, and the current cloud backlog reached €22.929 billion, up 26%. Non-IFRS operating profit missed estimates, and SAP trimmed its full-year operating profit outlook to reflect the dilutive cost of its Dremio and Prior Labs acquisitions, while keeping its cloud and total revenue guidance unchanged.
2026-05-01: SAP and Anthropic announced that Claude now powers reasoning inside Joule, SAP's AI assistant, as part of the new SAP Business AI Platform.
2026-04-29: SAP published a new API policy. It blocks outside AI agents from planning and running their own sequence of calls against SAP data. Agents must now go through SAP's own Business Data Cloud or Joule instead. The user group DSAG publicly criticized the policy for unclear terms and an unclear list of covered APIs.
2026-02-01: SAP stock fell to €162.10, the lowest price since February 2024. Software stocks fell broadly across this period.
2026-01-29: SAP stock fell about 15% in one day. The market reacted to weak cloud growth guidance for 2026.
2025-07-01: SAP began to bundle AI usage, called AI Units, into its cloud contracts. This is a new way to price AI agent work, separate from the per-user price.