SAP stock halves from record high as 'SaaS apocalypse' fears grip market ahead of half-year results

From DAX leader to second place

SAP, the Walldorf-based software maker founded in 1972 by five former IBM employees including Dietmar Hopp and Hasso Plattner, was long the most valuable company on the DAX index. That position has now been taken by Siemens, with insurer Allianz also vying for the number two spot. The stock reached an all-time high of €284 on 19 February 2025, but recently traded below €140, a decline of more than 50% in roughly a year and a half.

The cloud pivot and AI ambitions

CEO Christian Klein has driven a strategic shift from on-premise software to cloud subscriptions, known as software-as-a-service (SaaS). Customers pay recurring fees instead of large upfront license payments, gaining easier access to updates, including new AI features. At a customer conference in mid-May in the United States, SAP presented its vision of the "autonomous enterprise," where AI agents are embedded in business processes, data flows, and corporate management to deliver results and reduce costs.

Strong 2025 results, cautious 2026 outlook

Despite the share price decline, SAP's operational performance has been solid. In 2025, revenue grew 8% to €36.8 billion, driven by strong cloud software growth. Adjusted operating profit rose 28% to €10.4 billion, helped by savings from a large-scale personnel restructuring. Net profit more than doubled to €7.5 billion. However, when presenting first-quarter 2026 figures, the company tempered expectations, forecasting slower business growth despite continued demand for its cloud products.

The 'SaaS apocalypse' fear

The stock's sharp fall is attributed to what industry observers call the "SaaS apocalypse." The core worry, as articulated by Oliver Frey, an analyst at Bankhaus Metzler, is that AI programs and agents could autonomously perform tasks for which SAP and other software vendors currently sell licenses. This would erode the per-user-per-month subscription model.

The worry is that AI programs or AI agents can independently take over tasks for which SAP and all major software manufacturers currently sell licenses. Customers would then no longer need all those subscriptions; the classic per-user-per-month model would be undermined.

Frey emphasizes that this threat extends across the entire software industry. The debate now centers on which company will control the central AI orchestration layer that agents use to access underlying systems and manage requests.

That is exactly what the market is discussing now: who will claim this orchestration layer for themselves?

For SAP, the danger is losing this control layer and being reduced to a data provider. Yet Frey also notes that SAP's extensive data assets are a formidable competitive advantage, and displacing the company from its deeply integrated enterprise systems will be difficult. In the future, a central AI layer will likely emerge, from which agents access background systems and steer requests. The question is whether SAP can own that layer or will be pushed into a supporting role.

Half-year results ahead

SAP is scheduled to report its first-half 2026 results on Thursday, 23 July. The figures and management's commentary will be closely scrutinized for signals on how the company intends to address the AI-driven transformation of the software business.