Key Takeaways
• SAP’s stock fell to its lowest level since August 2024, erasing roughly $130 billion in market value amid tech selloffs.
• Investors fear AI could undercut traditional software pricing and reduce future revenue potential at major vendors like SAP.
• Weak sentiment grips software stocks broadly, though analysts still see long-term upside for Europe’s largest software maker.
Shares of SAP SE, Germany’s largest software company, fell sharply on Wednesday, sliding to their lowest level since August 2024. The extended downtrend has wiped about $130 billion off the company’s market value compared with its record high in February 2025. Investors have become increasingly skittish, selling off software stocks as fears grow about the impact of artificial intelligence on traditional enterprise software pricing and services.
The selloff is part of a broader decline hitting technology and software equities in Europe and on Wall Street. SAP’s stock slid around 2.4% in Frankfurt trading, putting pressure on the company’s valuation just days before it is scheduled to report quarterly earnings.
Market analysts say much of the weakness stems from concerns that AI-driven automation could make classic software modules easier to replicate or obsolete. This could force prices lower and weaken long-term revenue potential for vendors that historically charged high fees for specialized software and consulting services.
Portfolio managers point out that the selloff reflects a shift in investor preferences toward AI-native companies and away from traditional software firms that may struggle to adapt quickly. Even though many analysts maintain a positive long-term view of SAP’s business fundamentals, short-term sentiment remains depressed.
SAP had previously forecast full-year cloud revenue at the lower end of its guidance range, although it expects full-year operating profit toward the upper end. Some investors worry that slower-than-expected cloud growth could compound pressure on its core business as digital transformation strategies evolve.
Jefferies analyst Brent Thill noted in a research update that sentiment toward software stocks has rarely been lower. He pointed out that SAP’s valuation has approached levels seen during past market troughs, suggesting that expectations for near-term performance have been markedly reduced.
Technical indicators in trading charts continue to flash “sell signals,” according to traders speaking on the Frankfurt market floor. Some institutional investors are taking long positions ahead of SAP’s upcoming results, hoping that strong earnings or strategic announcements could spark a turnaround. However, broader market momentum is still skewed toward risk reduction rather than accumulation.
The S&P 500 software index, which tracks major U.S. software firms, has also lost ground in 2026, reflecting widespread skepticism about traditional software models amid rapid AI adoption. The index’s decline highlights how sentiment toward legacy tech companies has shifted as generative AI and machine learning become central to growth narratives.
Despite the equity downturn, some analysts stress that the selloff may be overdone. They argue that SAP’s entrenched position in enterprise markets, strong cash flow, and ongoing migration to cloud services could provide resilience and support future earnings growth once markets stabilize.
SAP itself has been investing in AI integration within its software ecosystems and forming strategic partnerships aimed at unlocking new capabilities for customers. However, translating these initiatives into measurable revenue gains remains a key challenge that SAP must address to restore investor confidence.
Investors will closely watch SAP’s forthcoming earnings report, expected to provide updated guidance and performance metrics. Strong results, particularly in cloud and recurring revenue, could temper some of the recent selling pressure. Analysts will also be looking for clear signs that SAP’s AI strategy is gaining traction in the marketplace.
Market participants broadly agree that sentiment in the software sector may stay volatile until companies demonstrate concrete returns from AI-related investments. As companies like SAP pivot their business models, investors are weighing the transition risks against long-term opportunities in cloud and data analytics.
If SAP’s earnings beat expectations and strategic initiatives resonate with corporate clients, the stock could rebound. But for now, short-term selling pressures tied to AI fears continue to weigh heavily on SAP and its peers in the global software landscape.
