SAP Scraps Job-Security Pact as AI Pivot Reshapes Its Workforce

SAP's new works council framework replaces its job-security arrangement for 25,000 German staff, as AI and cloud partnerships with NVIDIA and NetApp advance.

SAP has struck a new framework agreement with its works council that will govern future restructurings, and the deal marks a clean break from the past: the existing job-security arrangement expires at the end of 2026 and will not be renewed in its current form. The upshot for the roughly 25,000 employees SAP keeps in Germany is that the company is no longer bound by a blanket guarantee against redundancies tied to operational changes.

What the new compact does provide is severance entitlements and alternative employment options within the group. That mix drew a disappointed response from parts of the works council and from IG Metall, though employee representatives pointed to the financial safeguards they managed to negotiate should cuts materialize.

A Strategic Overhaul, Not a Cost Exercise

The personnel shake-up sits inside a broader transformation being driven by CEO Christian Klein. SAP is tilting its portfolio toward artificial intelligence and cloud services, with the "autonomous enterprise" as the organizing idea — a vision in which recurring business processes are automated by technology. Specialized AI agents and the digital assistant Joule form the backbone of that push, and linking core enterprise data to SAP's cloud infrastructure is meant to deepen customer lock-in. To shore up the foundation, SAP is also widening its cloud-infrastructure work with NetApp.

For the stock, the pivotal question is how quickly and durably those AI offerings convert into cloud revenue.

Two Partnerships, One Security Pitch

The partnership drive picked up pace this week. On Monday, SAP disclosed a deeper collaboration with NVIDIA, integrating NVIDIA OpenShell into the runtime environment of Joule Studio and contributing to the development of the OpenShell codebase. The aim is to make AI agents safer and more reliably auditable.

A day later, NetApp weighed in, saying it intends to expand its long-standing alliance with SAP and is evaluating a more deeply cloud-native integration of its own functions into the SAP Cloud Infrastructure. For investors, the significance lies in the groundwork: technology partnerships set the stage for future software offerings.

That matters because enterprises rolling out automated assistants demand binding security standards. Poorly controllable software systems act as a brake on investment decisions in commercial deployments, and the OpenShell integration targets precisely that hesitation by reducing operational risk. Whether customers adopt Joule Studio's expanded capabilities in day-to-day work — and whether they migrate to the SAP Cloud Infrastructure — hinges on the reliability and stability of the underlying platform.

What the Analysts Are Pricing In

If SAP can clear corporate customers' security concerns, its market position strengthens. In a bullish scenario, the interplay with NVIDIA and NetApp accelerates the shift of existing users to the cloud, while better auditability of autonomous AI agents lowers barriers in heavily regulated industries. When IT chiefs can satisfy statutory requirements faster through standardized verification mechanisms, sales cycles shorten measurably.

Market watchers share that view in part. Roughly a week ago, Jefferies raised its price target on the stock from EUR 210 to EUR 220 while keeping a "Buy" rating. Bank of America also reaffirmed a positive stance with a target increase, according to media reports.

The counterweight is the risk of delayed monetization. Should the review of a deeper NetApp integration into the cloud infrastructure fail to produce quick results, disillusionment could set in. Security standards also require broad buy-in from business units; if customers hang back on AI agents or stay stuck in trial phases, the hoped-for productivity gains won't show up and the extra lift for software subscriptions fizzles out. Slower cloud growth would feed straight into the valuation, and without proof that users will pay more for added security modules, margin expectations come under pressure.

Chart Levels and the October 21 Marker

On the technical side, the 200-day moving average at EUR 166.41 offers an important reference point. As long as the shares hold above that support, the longer-term trend picture stays intact; a sustained break below it would risk widening the consolidation. To the upside, the resistance zone of previous highs forms the next hurdle, and a durable advance requires fundamental confirmation from operations.

A concrete catalyst is already scheduled. SAP has announced it will publish third-quarter results on October 21, 2026 — a date that will show how much the strategic partnerships and cloud initiatives are already carrying the numbers.

Shares Shrug Off the Restructuring

Equity investors took the overhaul in stride. SAP's stock added 0.2% on Thursday to trade at EUR 184.90, putting it 3.3% above its 50-day average. After a noticeable recovery since the summer, the software-driven transformation remains the central reference point for investors, with progress on the shift toward higher-margin cloud products and execution of the internal restructuring likely to steer the share price from here.