While AI uncertainty is weighing on SAP’s course, it is precisely this technological change that could open up new opportunities in the long term.
• Cloud transformation puts a strain on SAP margins in the short term
• AI creates uncertainty and at the same time new imagination
• Comeback depends on implementation of the AI strategy
The SAP share, which has been the undisputed pride of the German leading index DAX for years, is currently facing an unusual period of weakness. Where the picture was characterized by steady growth and reliability for a long time, there is now a noticeable disillusionment on the markets. Since the start of the year alone, the DAX giant has lost around 32 percent in value, and over the last twelve months the loss even adds up to 42 percent.
In view of the sometimes drastic price drops, many investors are faced with the pressing question of whether the share price can already be considered cheap at this level or whether the structural problems are deeper than initially assumed.
Several negative factors for SAP shares
The sharp decline in stock market value cannot be reduced to a single factor, but is the result of a complex interplay of macroeconomic headwinds and home-grown challenges. A central point is the laborious transformation of the business model towards cloud-based solutions. While this change is seen as having no alternative in the long term, in the short term it puts pressure on margins and creates uncertainty for investors who were used to the high cash flows of classic license sales. In addition, rising interest rates and the general reluctance in the technology sector have led to growth stocks being valued more strictly. The market’s skepticism was fueled by concerns that SAP could lose out in direct comparison with US competitors, which further accelerated the sell-off of the share price.
AI as a threat or opportunity?
But despite the current cloudiness in the stock market, there is a potential turning point on the horizon that is closely linked to the megatrend of artificial intelligence, as SAP’s foray into the field of AI could ultimately provide the decisive starting signal for a sustainable recovery. The company is investing heavily in integrating generative AI into its existing software suites to make business processes more efficient for customers. This focus on technological innovation is intended not only to retain existing customers, but also to open up new growth markets. The optimists’ hope is that this realignment will enable SAP to move from being a mere manager of corporate data to an active designer of intelligent corporate management.
Just last week, SAP announced its acquisition of Reltio in this context. Their technology is intended to help SAP customers make all company data AI-ready, regardless of whether it is managed in SAP or third-party applications.
Ways out of the crisis
A possible comeback story for SAP depends largely on how quickly and effectively the “Business AI” strategy bears fruit. If management can continue to grow cloud revenue while improving profitability through AI-powered automation, investor confidence could quickly return. The potential is there because the deep integration of SAP systems into the core processes of global corporations represents an enormous competitive advantage. The decisive factor will be whether the Walldorf-based company can translate its technological superiority into concrete profit growth. If this proof is successful, the current price setback could, in retrospect, only be seen as a painful but necessary consolidation phase on the way to a new, more digital era for the group.
On Monday we can already see something of a possible comeback story for the SAP share: Via XETRA, the SAP share temporarily rose by 1.67 percent to 144.94 euros.
Claudia Stephan, Benedict Kurschat, editorial team finanzen.net
This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.
Selected leverage products on SAP
With knock-outs, speculative investors can participate disproportionately in price movements. Simply select the lever you want and we will show you suitable open-end products on SAP
The leverage must be between 2 and 20
Advertising
