SAP’s €2.6 Billion Buyback and Cloud Momentum Face a Defining Test in October
Published on 07/28/2026 at 06:41 | Redaktion boerse-global.de
The German software giant’s stock surged 7.29 percent on Monday to close at €150.74, snapping a prolonged stretch of weakness that had driven shares to a 52-week low of €127.52 just days earlier, on July 23. The catalyst was a set of quarterly figures released Thursday that showed the company’s cloud engine firing on all cylinders — even as management simultaneously trimmed its profit outlook for 2026.
The contrast between operational strength and strategic spending has become the central tension for investors weighing SAP’s prospects. The current cloud backlog, a measure of contracted future revenue, expanded 27 percent to €22.9 billion, while cloud revenue climbed 22 percent to €6.3 billion. Currency-adjusted non-IFRS operating profit rose 9 percent to €2.74 billion, and adjusted earnings per share improved from €1.46 in the year-ago period to €1.89. Yet the company lowered its 2026 guidance for currency-adjusted non-IFRS operating profit to a range of €11.8 billion to €12.2 billion, down from a previous ceiling of €12.3 billion.
The profit revision stems directly from two recent acquisitions. SAP completed the purchase of data-lakehouse platform Dremio in early July and closed the deal for AI specialist Prior Labs on July 17, committing to invest more than €1 billion over four years to build the unit into a frontier AI laboratory. Management cited dilution effects from these deals as the reason for the guidance cut, a move that JPMorgan analyst Toby Ogg highlighted in maintaining a “Neutral” rating and €175 price target, pointing to the margin erosion that accompanied the strong cloud growth.
Chief Executive Christian Klein reinforced confidence in the company’s trajectory with a personal share purchase worth €325,218.90 shortly after the earnings release. That insider buying coincided with the launch of the second tranche of SAP’s €2.6 billion buyback program on July 27, which will run until January 2027. The combination of capital returns and insider conviction has given the stock a tailwind, but the shares still trade 14.46 percent below their 200-day moving average, underscoring how much ground remains to be recovered from a peak of €258.60 reached in late July of last year.
Should investors sell immediately? Or is it worth buying SAP?
Analyst reactions have been cautiously constructive, with several houses trimming price targets while maintaining positive ratings. Goldman Sachs lowered its target from €230 to €215 but kept a “Buy” rating, with analyst Mohammed Moawalla citing the robust cloud backlog as evidence of operational strength. Berenberg cut its target to €205 from €215 while also sticking with “Buy,” attributing the revision to the rising costs of the AI push that SAP itself flagged. Jefferies affirmed “Buy” with a €210 target, calling the cloud backlog the standout feature of the quarter. UBS held “Buy” with a €164 target, emphasizing the acceleration in short-term cloud contract growth. The price targets across these four houses range from €164 to €215, all above Monday’s close but carrying notable discounts from prior estimates.
The bull case rests on the momentum in cloud subscriptions. Airbus selected “RISE with SAP” combined with a sovereign cloud operating model in late July, signaling that even security-conscious large enterprises are embracing SAP’s cloud architecture. If the backlog trend persists, it should translate into accelerating revenue in coming quarters. The buyback, meanwhile, reduces the share count and provides a per-share lift that compounds the operational gains.
The bear case centers on margins and execution risk. The lowered 2026 profit guidance suggests that investments in AI acquisitions may generate costs faster than they produce returns, raising the possibility of further forecast adjustments. The stock’s annualized 30-day volatility of nearly 48 percent leaves it vulnerable to sharp reversals if cloud growth decelerates in any future quarter. Regulatory scrutiny also lingers: the European Commission recently concluded its review of SAP’s maintenance and support policies for on-premise solutions, a reminder that the company faces headwinds beyond the cloud transition.
SAP at a turning point? This analysis reveals what investors need to know now.
The next concrete test arrives on October 21, when SAP reports third-quarter results. Until then, the stock’s trajectory hinges on whether the cloud backlog continues to grow at double-digit rates and the buyback proceeds as planned. The 18.21 percent rebound from the July 23 low has narrowed the gap to the 50-day moving average of €144.00, but a failure to sustain momentum could see the shares drift back toward that level. For now, the market is betting that the cloud engine can outrun the costs of building the future — a wager that will be judged quarter by quarter.
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