SAP SE (NYSE:SAP) was one of the software-as-a-service stocks caught up in the February SaaSpocalypse selloff, which wiped out almost $300 billion from U.S. software and data stocks in a single session. The SaaSpocalypse narrative centered on fears that AI agents would replace the per-seat software subscription model that built companies like SAP.
The company isn’t the only enterprise software giant navigating industry changes. Oracle is currently facing scrutiny over licensing practices similar to the issues that recently pushed SAP to make concessions in Europe. You can read more about that here.
Nearly eight months later, the reality is different, and the SaaSpocalypse is fading. Look for the re-rating to continue as SAP’s AI capabilities and opportunities become clearer.
SAP’s AI Moat Is Its Enterprise Data and Workflows. It’s a Deep Footprint
At its 2026 Sapphire event in May, the company introduced SAP Business AI Platform, which combines Business Technology Platform, Business Data Cloud and Business AI. Its Knowledge Graph is designed to give agents structured context about business entities, processes, and relationships across customers’ SAP environments.
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Then, at the Transformation Excellence Summit this week (September 22-24), the company highlighted new capabilities across Signavio, LeanIX, WalkMe, and Cloud ALM. The expanded capabilities are designed to help enterprises deploy, govern, and scale AI agents.
Now, AI agents are only as good as the data available to them. SAP is already inside core enterprise functions, from finance to procurement to human resources. If agents can securely execute tasks within those workflows, SAP’s existing software footprint can become a distribution advantage for enterprise AI.
There are already signs of commercial traction. SAP said its Autonomous Enterprise strategy helped drive strong cloud demand in Q2. Cloud revenue increased 22%, and Cloud ERP Suite revenue rose 25%. The current cloud backlog jumped 27% to €22.9 billion. AI and Business Data Cloud were embedded in more than 90% of the company’s 50 largest deals. SAP SE continues to forecast 2026 cloud revenue of €25.8 billion to €26.2 billion, reflecting up to 25% growth at constant currencies.
The Problem Is, Clean Execution Isn’t Assured
The AI opportunity is huge, and SAP SE is aggressively going for it while leveraging its foundational advantage. The biggest test is execution.
SAP has increased investment in R&D, and the company is also making strategic acquisitions, to bolster its AI strategy. The company expects the recently completed acquisitions of Dremio and Prior Labs to cause a dilutive impact of more than €100 million on its 2026 non-IFRS operating profit.
If AI adoption fails to translate into higher revenue or stronger retention, the additional investment could pressure margins without extending SAP’s growth trajectory.
Hedge Funds Moving In, Shorts Pulling Back
According to the Insider Monkey database, there were 35 hedge funds holding SAP shares at the end of Q2, up from 33 in the previous quarter. As more funds move in, shorts are pulling back. Short interest stands at just 0.44% of the public float. Bearish bets have decreased more than 37% from the previous reading.
SAP’s enormous installed-base and strong cloud growth provide a solid foundation for its AI strategy. That gives SAP a credible path to deepen its enterprise moat, but the key test is whether it can do so without sacrificing margins in the process.
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