Minus 40 percent loss at SAP

Christian Klein argues like Donald Trump

On the day the preliminary SAP balance sheet figures for 2025 were published, SAP shares on the Frankfurt Stock Exchange lost over 15% at times. This is a one-off daily loss and shows the shock effect of the SAP figures. However, according to SAP's own presentation, all key figures are positive. On the SAP chart for the current balance sheet figures, there are only green arrows pointing upwards, see chart on this page.

CEO Christian Klein and CFO Dominik Asam argue in a similar way to US President Donald Trump: what do you care about reality, the spoken word counts! Donald Trump is talking up the weakness of the dollar and Christian Klein has positive words to say about the figures presented. However, the bill is paid on the stock exchange and financial analysts and investors seem to have a completely different opinion.

SAP CEO Christian Klein said defiantly: „The fourth quarter was characterized by a strong cloud business. The good order intake increased the total cloud backlog by 30 percent to a record level of EUR 77 billion and with the significant growth of the current cloud backlog in the fourth quarter, we have a solid foundation to achieve accelerated revenue growth until 2027. SAP Business AI has become a key growth driver and is already included in two thirds of our cloud contract wins in the fourth quarter. At the same time, we are seeing strong adoption of artificial intelligence across the ERP suite.“ (See also explanation of „Business AI“ at the end of this text).

His fellow Executive Board member and CFO Dominik Asam adds: „With a strong operating result and a free cash flow that exceeded our expectations, we have successfully closed 2025. This result underlines the targeted implementation of our strategy and our cost discipline. It is also clear that our customers continue to trust SAP as a reliable partner for their digital transformation. Our continued strong growth in SaaS and PaaS is well ahead of the market and this is also reflected in our operating result and free cash flow. We are therefore confident that our strategy and cost discipline will continue to ensure long-term value creation.“

Sustainability: SAP is losing touch with the cloud/AI scene

The fact is that SAP was able to keep up with the cloud hype for years without making its own mark. In a general cloud euphoria, it was easy for the global ERP market leader to benefit from the favorable market conditions. However, SAP was no longer able to successfully swim along in a growing market with AI. Neither cloud computing nor AI can currently contribute anything positive to SAP's business development - the SAP share price reflects this failure perfectly.

Sustainability? The term describes a process whose results in turn produce something new: Managing a forest sustainably means that new trees can grow in turn as a result of timber extraction and forest maintenance. The forest is profitable and at the same time continues to grow in order to ultimately be even more profitable. SAP has clearly failed to achieve this goal.

SAP CEO Christian Klein surfed the cloud wave for a long time and profited from it, with the share price rising to over 280 euros. But it was not sustainable! Klein tried something similar with AI, and it failed immediately - handelsblatt.com reported that AI SAP marketing is far ahead of reality. Now the preliminary SAP balance sheet figures published today confirm that CEO Christian Klein and CFO Dominik Asam have mastered neither cloud nor AI: SAP shares lost up to 15 percent at times, trading at 166 euros - since their high last year, the loss has accumulated to a whopping minus 40 percent.

Cloudy promises: Why SAP cloud dreams fail in the face of reality

SAP is not a cloud company, but an ERP group that is desperately trying to retain technological sovereignty over its existing customers by adapting a third-party operating model whose core rules it has not mastered. The much-vaunted cloud DNA is completely absent in Walldorf, as the company's roots are deeply anchored in the on-prem world of R/3 and ECC 6.0.

Even the Hana database technology, once hailed as a revolution, was originally an on-prem-only project to accelerate computing processes and was never designed for infinite scaling in cloud computing. If Hana does not scale as expected in the cloud, this is not a coincidence, but a systemic failure of the code, which was written for hardware appliances and not for virtual elasticity.

SAP recognized early on that its own infrastructure expertise was not enough to compete with giants such as Amazon, Microsoft or Google. The partnerships with these hyperscalers are not a sign of strength, but an admission that the infrastructure business has been technically lost.

What SAP sells under the „cloud“ label is often just a „lift and shift“ of outdated architectures to external servers, a „Potemkin village“ that simulates modernity while old mechanisms are often still working in the background. The strategy seems erratic: sometimes it's „cloud first“, then „cloud only“, only to end up with hybrid models because the reality of customers speaks a different language.

The SAP cloud strategy is particularly perfidious when it comes to vendor lock-in. Programs such as „Rise with SAP“ primarily serve to deprive customers of their valuable, perpetual on-prem licenses and force them into a rental model (subscription). By switching to metrics such as FUE (Full Use Equivalent), the customer loses all autonomy over their ERP system. He is degraded from owner to tenant, at the mercy of price dictates.

However, the biggest risk is the lack of a valid cloud exit strategy. Once you have exchanged your licenses for cloud contracts, there is no way back. The contracts stipulate that data may be deleted shortly after the contract ends, which can threaten the existence of companies without their own backup licenses. SAP is not using the cloud as a technological liberator, but as a golden cage to maximize revenue.

The AI revelation: Why SAP is just a free rider in the age of AI

SAP's AI dilemma is like a technological revelation that ruthlessly exposes the failings of an entire decade. While US tech giants are pumping billions into the development of their own large language models (LLMs), SAP in Walldorf is merely managing its own lack of innovative strength.

There is no „SAP GPT“ because the Group simply lacks the courage, resources and technological vision to play in the concert of the big players. Instead, it is resting on its laurels: The much-cited „Predictive Analysis Library“ (PAL) in the Hana database is a relic from the era of classic machine learning, a statistical toolbox for regression and classification that has nothing in common with the revolutionary power of generative AI.

The former flagship project „Leonardo“, which was supposed to combine AI and IoT, ended up as a spectacular flop and was quietly buried because SAP did not understand the market and customers did not see the added value.

Today, SAP CEO Christian Klein is trying to fill this strategic vacuum with hectic actionism and an opaque network of partnerships, which is self-critically referred to internally as a „patchwork quilt“ or even „Frankenstein architecture“.

The investment in German AI hopeful Aleph Alpha looks more like a fig leaf than a serious strategy: while SAP is only investing a single-digit million amount, Microsoft and Google are investing billions in their models. SAP does not understand the rules of the game: it is trying to sell AI as „Business AI“, but technically often only provides a proxy to the models of OpenAI, Google or Amazon via the „Generative AI Hub“ of the Business Technology Platform (BTP).

The chaos is perfect when SAP simultaneously announces collaborations with Nvidia, Databricks, Collibra and DataRobot without giving a clear indication of who actually has sovereignty over the data in this „Wild West“ of AI agents. In fact, SAP obtains almost all of its AI knowledge and services from external hyperscalers and start-ups, while its own contribution is limited to embedding this external intelligence in SAP contexts via the „Joule“ assistant.

The attempt to use this purchased innovation as a lever to force existing customers into the cloud is particularly perfidious: Anyone who does not book „Rise with SAP“ will be cut off from AI innovations - blackmail that shows that SAP sees AI less as technological progress and more as a sales weapon. Ultimately, SAP remains an AI consumer without its own sovereignty, dependent on the goodwill of US providers.