SAP’s Cloud Revenue Hits €6.3 Billion, but AI-Fueled Acquisitions Force a Pivot on Profit Guidance
Published on 07/28/2026 at 09:41 | Redaktion boerse-global.de
The tension between SAP’s booming cloud business and the mounting cost of its artificial intelligence ambitions came into sharp focus last week, as the German software giant delivered second-quarter results that left investors weighing two very different signals.
On one hand, the numbers were unmistakably strong. The current cloud backlog — a measure of contracted future revenue — surged 27% to €22.9 billion, while cloud revenue itself climbed 22% to €6.3 billion. Adjusted earnings per share rose from €1.46 a year earlier to €1.89. Major existing customers including Airbus and Shell continue to accelerate their migrations to SAP’s cloud-based ERP suite, locking them into the company’s ecosystem for years to come.
Yet alongside those figures, management trimmed its outlook for full-year adjusted operating profit to a range of €11.8 billion to €12.2 billion, down from a previous ceiling of €12.3 billion. The revision reflects dilution from two recently completed acquisitions: Dremio, a data lakehouse platform acquired in early July, and Prior Labs, a specialist in tabular foundation models whose deal closed on July 17. SAP has committed to investing more than €1 billion over the next four years to build these assets into a frontier AI laboratory — a sum that explains the near-term profit squeeze without altering the strategic direction.
The market’s verdict was clear: the operational strength carried more weight than the guidance cut. On Monday, SAP shares jumped 7.29% to close at €150.74, extending a recovery that has now delivered roughly 11% gains over seven trading sessions. The stock had already risen 1.83% to €153.50 in earlier trading, though the broader picture remains sobering. From its all-time high of €258.60 reached in late July last year, the shares still trade more than 41% lower, and the year-to-date decline stands at 26.73%.
Should investors sell immediately? Or is it worth buying SAP?
The AI Pricing Pivot and the Cost of Transformation
At the heart of the debate is SAP’s shift from user-based licensing to value-oriented AI pricing. The company is betting that customers will pay premiums for concrete outcomes delivered by AI assistants and agents, rather than simply for access to software. That transition requires heavy upfront investment in infrastructure — investment that is now weighing on margins and forcing the guidance revision.
The critical question is whether SAP can prove that clients are willing to pay meaningful surcharges for these new AI capabilities. If the evidence emerges, the market is likely to treat the current cost pressure as a temporary phase. If it does not, skepticism over the scale of AI spending could cap the stock’s recovery.
Analysts have responded by trimming their price targets while maintaining broadly bullish stances. Goldman Sachs lowered its target from €230 to €215 but kept a “Buy” rating, with analyst Mohammed Moawalla pointing to the robust cloud backlog as evidence of operational strength. Berenberg cut its target from €215 to €205, also retaining “Buy,” as analyst Nay Soe Naing attributed the guidance cut directly to the AI-related costs SAP itself flagged. UBS held at “Buy” with a €164 target, highlighting the acceleration in short-term cloud contract growth, while Jefferies kept “Buy” with a €210 target and called the cloud backlog the quarter’s standout feature. The resulting target range of €164 to €215 sits comfortably above Monday’s close, though each represents a downward adjustment from prior estimates.
Technical Levels and Sector Sentiment
Chart watchers are focusing on the 50-day moving average at €143.98 as a key support level. As long as the stock holds above that line, the technical picture remains constructive. The recent rally has brought the shares close to the €150 mark, and sustained cloud momentum could support stabilization above that threshold.
But the broader environment for software stocks will matter greatly in the weeks ahead. Upcoming earnings from other tech heavyweights, particularly Microsoft, are likely to shape sentiment around AI investment across the sector. If the market grows uneasy about whether massive infrastructure spending is translating into returns, SAP’s own AI costs could come under renewed scrutiny.
SAP at a turning point? This analysis reveals what investors need to know now.
The company has also received a separate boost from the Tschira family, which increased its voting stake in SAP, and from a European Commission decision that concluded a review of guidelines for on-premise maintenance and support. Those developments, while secondary to the earnings narrative, add to the sense that the company’s long-term positioning remains intact — even as the short-term profit path becomes more expensive.
For now, the bull case rests on visibility: the cloud backlog provides rare clarity into future revenue, and the migration of blue-chip customers suggests demand for SAP’s cloud ERP suite is unbroken. The bear case warns that if the already-lowered guidance is missed, or if corporate IT budgets tighten further, the stock could slide back toward its yearly low. The next milestone will be whether SAP delivers the planned rollout of its AI agents by year-end — a test that will determine whether the market views the current costs as an investment or a burden.
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