Key Takeaways
- SAP shares are down 37% so far in 2026, following a year-long slide and a sharp sell-off in software-as-a-service stocks.
- The German software giant was previously Europe’s most valuable company, when shares peaked in 2025.
- Morningstar now sees the five star, wide-moat stock as undervalued.
While the AI rally pushes many tech stocks to record highs, German enterprise software giant SAP SAP has failed to keep pace.
SAP shares are down 37% so far in 2026, following a year-long slide and a sharp sell-off in software-as-a-service stocks.
SAP’s stock is now more than 50% off its record high in early 2025, when a blistering rally led by its cloud business earned the stock the crown of Europe’s most valuable company.
So what is driving SAP’s share price decline?
What Is Hurting SAP Shares This Year?
SAP’s first quarter results beat expectations on the top and bottom line. Cloud revenue rose 19%. Cloud backlog was up 20%, and operating profit rose 17%.
But the company flagged a deceleration in growth for the second quarter and softened its 2026 outlook. It now expects full-year revenue in line with the prior year—even with the addition of newly acquired software management firm Reltio.
The more cautious tone comes as software stocks have come under pressure amid concerns of displacement by advanced AI tools.
Rob Hales, senior equity analyst at Morningstar, nevertheless says he sees the sell-off as overdone, led by “indiscriminate market angst.”
With a fast-growing cloud business, and a sticky customer base of mega-cap companies, Hale adds that it’s “highly unlikely” generative AI can displace SAP’s deeply entrenched position. So, is the software stock a buy now?
Is SAP Stock a Buy Now?
With a market cap that’s declined to about EUR 160 billion, SAP’s valuation is now dwarfed by Europe’s new most valuable stock and AI chip darling ASML ASML.
But, at EUR 132 per share, the five star, wide-moat rated stock is trading at a 50% discount to its Morningstar fair value estimate of EUR 265.
Hale says the strength of SAP’s cloud business looks set to generate durable growth for years to come. The German tech giant’s second quarter results in late July will provide a fresh read on that outlook.
