SAP shares came under pressure on Wednesday after UBS downgraded its rating to neutral, citing concerns over the company’s integration of artificial intelligence and a potential slowdown in cloud contract backlog.
The software giant’s stock had surged nearly 48% over the prior four weeks, but the UBS move signals a pause in the rally. In pre-market trading on Tradegate, SAP shares were down 2.4% below their Xetra closing price.
UBS analyst Michael Briest noted that while SAP still provides core enterprise software infrastructure, its agentic AI integration has been sluggish. This not only limits monetization opportunities but also increases the risk that enterprises may seek alternative AI solutions. Briest also projected a slowdown in the Current Cloud Backlog (CCB)—contractually secured cloud revenues—in the second half of the year.
The downgrade reflects broader concerns about SAP’s ability to capitalize on the AI-driven enterprise software market. Briest maintained that SAP’s valuation remains reasonable but warned that investor sentiment remains fragile amid these challenges.
The broader market context includes rising competition in enterprise AI and a shift in enterprise spending priorities, which may further weigh on SAP’s near-term outlook.
