SAP’s Cloud Backlog Tops €22.9 Billion, but the Stock’s Recovery Has a Long Way to Go
Published on 07/27/2026 at 20:21 | Redaktion boerse-global.de
SAP shares surged as much as 7.6% on Monday, climbing to €151.48 as investors reassessed the software giant’s second-quarter earnings and refocused on the strength of its cloud business. The rally follows a brutal stretch that saw the stock hit a 52-week low of €127.52 just last Thursday, leaving it down roughly 40% from its all-time high of €254.15.
The catalyst was a quarterly report that delivered a classic “better-than-feared” surprise. While SAP trimmed its full-year operating profit guidance to a range of €11.8 billion to €12.2 billion — a move tied to dilution from the recent acquisitions of Dremio and Prior Labs — the cloud numbers stole the show. Currency-adjusted cloud backlog jumped 26% to €22.9 billion, signaling that demand for the company’s “Rise with SAP” and “Grow with SAP” transformation programs remains robust despite a turbulent macro environment.
The Margin Question That Won’t Go Away
The tension at the heart of SAP’s story is now squarely in focus: Can the company convert its swelling cloud order book into sustainable margins fast enough to justify the heavy spending on its “Business AI” offensive? Cloud revenue climbed 24% on a currency-adjusted basis to €6.28 billion in the second quarter, but the integration of new AI technologies is weighing on costs. The guidance cut — the first meaningful revision of the year — has forced investors to decide whether the margin pressure is a temporary M&A hangover or the start of a structurally higher cost base in the AI era.
Critical voices from DZ Bank and JPMorgan have warned that the cloud momentum could slow in the second half of the year, citing macroeconomic uncertainty and geopolitical risks that SAP itself flagged during its earnings call. The 30-day annualized volatility sits at roughly 48%, underscoring just how skittish the market has become around any deviation from expectations.
Should investors sell immediately? Or is it worth buying SAP?
Buyback Support and a Bullish Technical Setup
Adding to the positive momentum, SAP was expected to complete a €2.6 billion tranche of its €10 billion share buyback program on Monday. That likely provided an additional tailwind for the stock, as the repurchase activity absorbed selling pressure and reinforced confidence among institutional holders.
From a technical perspective, the picture has brightened considerably. The stock has reclaimed its 50-day moving average at €144.04, and the relative strength index sits at 60.6 — comfortably below overbought territory, leaving room for further gains. The 100-day moving average at €147.53 was breached during intraday trading, and the next major hurdle lies at the 200-day line near €173.36. A clean break above that level would represent a roughly 16% gain from current prices and signal a genuine trend reversal.
The Bull Case: Sticky Cloud Revenue and AI Pricing Power
The most compelling argument for a sustained recovery rests on the quality of SAP’s cloud growth. The cloud ERP suite — the core of the company’s architecture — expanded 27% on a currency-adjusted basis, and analysts at Berenberg and UBS have pointed to improving cost controls as a second pillar of support. The segment is considered highly sticky because customers are migrating their core business processes to the cloud, creating long-term recurring revenue streams.
A potential wild card is SAP’s evolving pricing strategy for AI solutions. The company is reportedly moving toward “outcome-based pricing” models, where customers pay for the measurable value delivered by AI agents rather than a fixed subscription fee. If that approach gains traction, it could meaningfully expand margins over the medium term. The upcoming launches of the expanded “Business AI Platform” and the “Joule Work” AI assistant in the third quarter will be key tests of whether SAP can translate its technological lead into commercial wins.
The Bear Case: A Long, Hard Road Back
Despite Monday’s bounce, the fundamental picture remains bruised. The stock is still down 38% over the past twelve months, and the reduced profit guidance underscores that the transformation into an AI-first company is proving more expensive than initially budgeted. The cloud backlog, while impressive, must eventually convert into revenue at acceptable margins — and there is no guarantee that will happen smoothly.
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Some skeptics have raised a structural concern: specialized AI applications could erode the traditional moats of ERP systems. If customers adopt AI agents more slowly than SAP anticipates, the current cloud euphoria could fade quickly. A slowdown in cloud growth below 23% in the next quarterly report would likely reignite bearish sentiment and put the €130 level back in play.
What Comes Next
The immediate focus is on whether SAP can consolidate above the 50-day moving average and build a base for a test of the 200-day line. The next major catalyst will be the third-quarter earnings report, scheduled for October 21, 2026. Between now and then, two questions will dictate the stock’s direction: How quickly are cloud margins improving? And how smoothly are the Dremio and Prior Labs integrations progressing?
If the buyback program continues to provide support and cloud growth stays above 20%, the rally could have legs. But with the stock still trading 40% below its peak and volatility running high, the path to a full recovery remains steep — and anything but certain.
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