SAP’s Record Cloud Backlog Sends Shares Soaring, but a Lowered Profit Outlook Tempers the Euphoria
Published on 07/25/2026 at 11:31 | Redaktion boerse-global.de
SAP shares staged their biggest single-day rally in recent memory on Friday, surging 9.15 percent to close at €140.80 after the German software giant unveiled second-quarter results that blew past analyst expectations on cloud demand. The jump provided a dramatic reprieve from what has been a punishing year — the stock remains down 32.42 percent since January, and still trades nearly 19 percent below its 200-day moving average.
The headline number that ignited the rally was the cloud backlog, which swelled 26 percent on a currency-adjusted basis to a record €22.9 billion. That figure represents contracted but not yet recognized revenue, and it underscores that corporate customers are locking in long-term commitments to SAP’s cloud platform at an accelerating pace. Cloud revenue itself climbed 24 percent to €6.28 billion, while total group revenue rose 9 percent to €9.88 billion. Free cash flow improved 27 percent to €3.0 billion, and net liquidity stood at €2.2 billion.
Under IFRS, earnings per share came in at €1.89, up 30 percent year over year, while on a non-IFRS basis EPS was €1.59. The company also repurchased 16.28 million of its own shares during the quarter at an average price of €161.16, signaling continued confidence in its capital allocation strategy.
The structural tailwind behind the cloud momentum is well known: support for older SAP systems is set to expire in 2027, forcing a wave of migrations that is still gathering pace. CEO Christian Klein highlighted that the company’s Business Data Cloud is now embedded in 90 percent of its 50 largest contract wins, and SAP expects to have more than 400 autonomous agents from its Autonomous Suite available by the end of 2026.
Should investors sell immediately? Or is it worth buying SAP?
Yet for all the top-line fireworks, the profit picture is more complicated. Operating profit came in at €2.74 billion, below expectations, and SAP trimmed its full-year 2026 non-IFRS 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. The culprit is the recently completed acquisitions of Prior Labs and Dremio, which are weighing on earnings by roughly €100 million. The company left its 2026 cloud revenue target of €25.8 billion to €26.2 billion unchanged.
To fund its AI push without letting costs spiral, SAP is tightening internal budgets. CFO Dominik Asam has introduced a token-based budgeting system that gives employees monthly AI usage allowances ranging from €100 to €5,000 depending on their role — a move designed to cap the cost of large language models before they eat into margins. Asam cautioned that much of the current AI adoption remains limited to basic use cases, and that the technology must move beyond simple chatbots to deliver real returns. He also cited the Middle East conflict as a factor weighing on some customers’ investment decisions, though the overall pipeline remains healthy.
SAP’s own internal research suggests AI can generate a 31 percent return on capital, with average spending of $26.7 million per enterprise customer. But the near-term margin pressure from the two acquisitions has split analyst opinion. Jefferies reiterated a “Buy” rating with a €210 price target, pointing to the strong backlog and what it sees as attractive valuation. JPMorgan, by contrast, downgraded the stock to “Neutral” with a €175 target, arguing that the weaker earnings and margin compression require a significant profit acceleration in the second half of 2026 — a feat that is far from guaranteed.
SAP at a turning point? This analysis reveals what investors need to know now.
On the technical side, Friday’s rally brings the stock within striking distance of its 50-day moving average at €144.01, a level that now sits just 2.23 percent above the closing price. A clean break above that threshold would offer the strongest signal yet that the medium-term downtrend is losing its grip. For now, however, the 200-day moving average remains a distant 18.98 percent overhead, a reminder that the broader trend still points lower.
The coming weeks will test whether the cloud backlog’s momentum can translate into a sustained recovery. SAP has promised a meaningful earnings pickup in the second half of the year, and the market will be watching closely to see whether the cost of its AI ambitions can be kept in check while the top-line engine keeps humming.
Ad
SAP Stock: New Analysis - 25 July
Fresh SAP information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.
Disclaimer regarding our articles: No investment advice, no buy or sell recommendation. Information on prices, companies, and markets is provided without guarantee; changes are possible at any time. Stock market transactions can lead to substantial losses. Our articles are created and reviewed in whole or in part automatically with the support of AI.
