SAP Reports Mixed Results. The AI Stock Is Falling.

SAP beat earnings estimates, but fell short on other counts. (Alex Kraus/Bloomberg)

SAP shares were sliding on Tuesday after the enterprise software company reported mixed second-quarter financials.

SAP posted second-quarter earnings of 1.50 euros a share, which beat Wall Street estimates for €1.43 a share, according to FactSet, and increased from the €1.10 a share in the same period last year. Revenue of €9.03 billion just missed analyst expectations for €9.09 billion.

SAP’s American depositary receipts were down 4.2% in premarket trading following the results. Investors could have been surprised by how much the dollar’s 12% decline against the euro this year has hit the figures—because the company reports in euros, a weaker greenback means revenue from the U.S. appear lower.

“I’m not sure whether the consensus already fully reflected” that the “dollar has been depreciating very fast,” Chief Financial Officer Dominik Asam said in an interview on Wednesday. “On underlying operational performance, the numbers were actually quite strong.”

Cloud revenue in the quarter was €5.13 billion, rising 24% from the prior year but missing estimates of €5.18 billion. This is an important number for the German software company, which remains focused on artificial intelligence and transitioning clients to the cloud.

SAP also reiterated its 2025 financial outlook. The company continues to expect 2025 cloud revenue to be between €21.6 billion to €21.9 billion at constant currencies, which is above the €17.1 billion from the prior year.

“As we move into the second half, we remain cautiously optimistic, keeping a close eye on geopolitical developments and public sector trends,” Asam wrote in the earnings release.

There is concern that President Donald Trump’s tariffs will cause enterprises to cut back on IT spending as costs rise. That would hurt software companies like SAP.

The ADRs have jumped 24% this year, outperforming the S&P 500’s 7.3% gain. Investors have had confidence in the company’s ability to grow revenue as it uses its AI and cloud offerings to improve efficiency and productivity in a time of economic uncertainty.

Alphabet and ServiceNow second-quarter earnings are on deck for July 23, while Microsoft is scheduled to report fourth-quarter financials on July 30.

Write to Angela Palumbo at angela.palumbo@dowjones.com