SAP’s Cloud Backlog Crosses €22.9 Billion, but Two Acquisitions Complicate the Profit Picture
Published on 07/25/2026 at 05:21 | Redaktion boerse-global.de
The German software giant’s stock surged 9.15 percent on Friday to €140.80, delivering the sharpest single-day gain in months. Yet the rally, triggered by second-quarter results released on Thursday, does little to mask a year that has punished shareholders: the shares remain 32.42 percent lower since January and have shed 42.24 percent over the past twelve months.
Friday’s bounce followed a session on Thursday when the stock initially dipped after the numbers landed, only to reverse as investors focused on the cloud business. The pattern encapsulates the tension that has gripped SAP for quarters — a growth story wrestling with mounting costs.
Cloud Backlog Hits a New High
The headline number that shifted sentiment was the cloud backlog, which expanded 26 percent on a currency-adjusted basis to €22.9 billion. This metric, representing contracted but not yet recognized revenue, underscores sustained corporate demand even as macroeconomic headwinds persist. Cloud revenue itself climbed 24 percent to €6.3 billion, comfortably beating analyst expectations and reversing a two-quarter slowdown.
Chief Executive Christian Klein told analysts that more than 90 percent of the company’s largest deals now include artificial intelligence components, reinforcing the narrative that SAP’s “Autonomous Enterprise” strategy is gaining traction. Total revenue rose 11 percent to €9.9 billion.
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The Cost of Building the Autonomous Enterprise
But the growth story comes with a price tag. Operating profit increased just 9 percent, a deceleration from the prior quarter that drew questions from analysts on the earnings call. Chief Financial Officer Dominik Asam attributed the slower margin expansion to higher research-and-development spending, marketing expenses tied to the Autonomous Enterprise launch, share-based compensation, and the impact of two July acquisitions.
SAP completed the purchases of Dremio and Prior Labs last month, and the combined effect will dilute earnings by more than €100 million. That forced management to trim its 2026 profit forecast to a range of €11.8 billion to €12.2 billion, down from previous guidance. Asam cautioned against reading too much into a single quarter’s margin performance, arguing the investments are necessary to secure long-term competitive advantage.
A Token Budget to Keep AI Costs in Check
One measure designed to reassure margin-wary investors is an internal budgeting system for AI usage costs. According to reports, employees will receive monthly allowances ranging from €100 to €5,000 depending on their role, capping the expense of running AI models before it spirals. The move signals that SAP is trying to balance aggressive AI investment with cost discipline — a delicate act that will define the stock’s trajectory.
Geopolitical Risk Hangs Over the Outlook
Unusually for a software company, SAP explicitly tied its 2026 financial outlook to a near-term de-escalation in the Middle East. Management acknowledged that other consequences of the regional tensions remain unknown but could materially affect the business if the situation deteriorates. The cloud backlog is also expected to face headwinds in the second half of the year, partly from geopolitical uncertainty and partly from a softer macroeconomic environment.
Technical Picture Remains Fragile
Despite Friday’s surge, the stock still trades well below its 200-day moving average of €173.78 — a gap of nearly 19 percent that keeps the long-term trend firmly bearish. The shares touched a new year low of €127.52 on Thursday just before the earnings release.
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The immediate technical test lies ahead: the 50-day moving average at €144.01 is now within striking distance, requiring a further 2.23 percent advance to breach it. A clean break above that level would offer the strongest signal that the medium-term downtrend is losing its grip.
Analyst views remain divided. Barclays holds a price target of $255, while TD Cowen sees the stock at $210. Both imply significant upside from current levels, though other voices counsel patience given the margin compression and geopolitical fog.
For now, the cloud backlog has given the bulls a reason to step in. Whether that turns into a sustained recovery depends on whether SAP can prove that growth and profitability can rise together — and that the costs of building the autonomous enterprise don’t outweigh the rewards.
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