SAP's €24.1 Billion Cloud Backlog Draws a Buy Call While Software Peers Stumble
Published on 10/31/2026 at 18:31 | Editorial boerse-global.de
A broker upgrade landed on SAP this week just as the wider software sector was taking hits from disappointing guidance elsewhere — a pairing that neatly captures the two forces now pulling at Europe's largest technology company.
Erste Group raised its rating on the stock to "Buy" on Thursday, a day when shares in the Walldorf-based group came under pressure alongside the broader software complex. According to dpa-AFX, the drag came from cautious outlooks issued by ServiceNow and Fortinet, which fed into a wider reassessment of the industry and revived worries that artificial intelligence could disrupt established software business models. By Friday the stock had recovered some ground, adding 0.7% — though that single session offers no clean read on how the market weighed either the upgrade or the company's latest AI usage figures.
Order Book Tells a Different Story
Set against that sector gloom, SAP's own numbers point the other way. In results published on October 21, the company reported a current cloud backlog of €24,144 million for the third quarter of 2026, up 28% year on year. Cloud revenue for the same period climbed 26% to €6,668 million, while total revenue grew 13%.
The backlog matters because it measures contracted future business rather than sentiment about where the industry is heading. It also gives investors a concrete yardstick against which the sector's anxieties can be tested — and so far the demand picture it paints is one of expansion, not retreat.
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SAP has also updated its guidance for cloud revenue and for combined cloud and software revenue for 2026. For the cloud line specifically, management expects to land at the top end of a range spanning €25.8 billion to €26.2 billion at constant currencies, an outlook issued alongside the quarterly figures.
AI Cuts Both Ways on the Cost Line
The same technology unsettling investors is also being deployed to trim SAP's own expenses. Finance chief Dominik Asam said on Wednesday, according to Reuters, that shifting from costly AI models to cheaper alternatives should contribute more than €2 billion in AI-driven efficiency gains. The company runs more than 70 AI models and is increasingly selecting the least expensive one capable of delivering the required performance.
Those savings, however, are a target rather than a realized result — a distinction that matters when weighing the growth story. For shareholders, the equation now has two sides: how widely SAP's AI products are adopted, and whether running them makes economic sense.
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On adoption, SAP's third-quarter roundup of AI innovations — including Joule Assistants and specialized agents — gave some indication of how far the offerings have penetrated the cloud customer base. Usage figures carry clear limits, though. Deploying an AI tool is not the same as booking revenue or profit from it, and product uptake should not be conflated with business growth.
What Investors Should Watch
The debate, then, is not a simple choice between AI as opportunity or AI as threat. SAP needs to keep its cloud expansion running while demonstrating that its AI deployment pays for itself. The growing backlog supports the demand side of that case; the targeted efficiency gains address the cost side. Both give investors tangible markers to judge whether the broader sector's misgivings are warranted — or whether they belong to competitors rather than to SAP.
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