UBS Downgrades SAP Stock Over Slow AI Agent Rollout

UBS downgraded the stock rating of SAP from Buy to Neutral, citing concerns over the slow delivery of agentic AI to its customers. While the financial services firm raised its price target for the enterprise software company to EUR201.00 from EUR164.00, analyst Michael Briest noted that the company's goal of delivering 200 AI agents by the end of the year appears challenging.

SAP has delivered 17 agents to date, with 15 more currently in the ramp-up phase. UBS highlighted that the complexity of the company's customer base hinders the deployment of ready-made AI solutions, particularly for clients using multiple ERP instances on private clouds with custom coding.

Beyond AI delivery, UBS anticipates a deceleration in cloud backlog growth during the second half of the year. The firm also suggested that the utilization of migration credits is weighing on free cash flow.