SAP’s Cloud Backlog Surges Past Forecasts, But AI Deals Leave a Margin Question Mark
Published on 07/26/2026 at 07:01 | Redaktion boerse-global.de
The German software giant’s shares staged a dramatic reversal on Friday, vaulting 9.15 percent to €140.80 just two days after plumbing a 52-week low of €132.22. The trigger was SAP’s second-quarter 2026 earnings release, which delivered a rare split verdict: a cloud backlog that blew past analyst expectations alongside a trimmed profit forecast that has investors debating whether the rally has legs.
The cloud business remains the headline act. SAP’s current cloud backlog — a forward-looking gauge of contracted but not yet recognized revenue — expanded 27 percent to €22.9 billion, or 26 percent on a currency-adjusted basis. Cloud revenue itself climbed 24 percent in constant currency to €6.281 billion, helping total sales reach €9.878 billion, marginally above the €9.85 billion consensus. The backlog figure, in particular, caught the market’s attention as a leading indicator of future growth momentum.
But the euphoria came with a footnote. SAP trimmed its full-year adjusted operating profit guidance to a range of €11.8 billion to €12.2 billion, down from the previous €11.9 billion to €12.3 billion corridor. The EBIT growth forecast was correspondingly lowered to 13 to 17 percent from 14 to 18 percent. Management attributed the revision to short-term earnings dilution from the just-completed acquisitions of Dremio, a data lakehouse platform, and Prior Labs, a Freiburg-based AI startup — both deals finalized on Thursday that are meant to bolster SAP’s “Business AI” strategy and its Joule autonomous agent ecosystem.
The market’s response was immediate and emphatic, but the underlying tension is unmistakable. Jefferies analyst Charles Brennan maintained his “Buy” rating with a €210 price target, citing accelerating subscription momentum that exceeded expectations. Other houses echoed the optimism, with targets ranging up to €200 and a view that the current margin pressure is merely a transitional investment phase ahead of an acceleration expected from 2027 onward.
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Yet JPMorgan’s Toby Ogg struck a more cautious note, keeping a “Neutral” stance and €175 target while calling the quarterly margin decline a clear negative surprise. The guidance cut, he argued, demonstrates that the AI acquisitions are already eating into profitability — and with integration only just beginning, the risk of further downward revisions cannot be dismissed.
Insider activity adds another layer to the narrative. CEO Christian Klein purchased SAP shares worth €325,219 at an average price of roughly €133.60 immediately after the results, a vote of confidence that echoes CFO Dominik Asam’s January buy at €169.20. Board member Thomas Heinrich Saueressig had also acquired shares worth €70,392 earlier in July, when the stock was trading even lower. These purchases contrast with earlier insider sales under the MOVE employee share program, suggesting the executive view is not uniformly bullish.
Technical indicators remain sobering. Despite Friday’s surge, the stock still trades nearly 19 percent below its 200-day moving average of €173.78, with annualized volatility above 43 percent. The single-day spike has not broken the medium-term downtrend, and the wide dispersion in analyst price targets — from UBS’s €164 to Jefferies’ €210 — reflects genuine disagreement about where the balance lies.
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A tailwind arrived earlier this month when the European Commission closed its competition review of SAP’s on-premise maintenance and support policies without taking further action, removing one regulatory overhang. Meanwhile, the company’s €10 billion share buyback program is progressing: the first tranche of roughly €2.6 billion covering 16.28 million shares has been completed, providing a structural support for the stock.
The next real test will come with the third-quarter 2026 results, when investors will see whether the record cloud backlog is converting into revenue growth at a pace that can absorb the acquisition-related margin drag. If the backlog continues to expand and the EBIT guidance holds steady, the bull case — that SAP is investing through a temporary profitability dip to capture a larger share of the enterprise AI market — will gain credibility. If margins deteriorate further, Friday’s rally may look less like a turning point and more like a fleeting respite in a longer adjustment.
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