SAP's Buyback Machine and Cloud Momentum Collide With Analyst Caution
Published on 08/09/2026 at 22:32 | Redaktion boerse-global.de
The software giant's shares have been on a tear, but the forces driving the rally are more layered than a single headline suggests. On Friday, SAP closed at €178.66, up 3.46 percent on the day — enough to make it both the most-traded and strongest performer in the DAX. The move pushed the stock to a multi-month high and capped a 30-day run that has seen the shares climb roughly 29 percent, cementing SAP's status as one of Germany's benchmark index heavyweights.
A Quiet Catalyst With a Big Price Tag
What sparked Friday's jump wasn't a flashy product launch or a blockbuster earnings beat. It was a footnote to an existing capital return program. On August 4, SAP disclosed the next tranche of its buyback scheme — a framework originally approved back in January 2026 that authorizes up to €10 billion in repurchases through the end of 2027. The second tranche kicked off on July 27, with SAP planning to acquire up to €2.6 billion worth of its own shares by January 27, 2027.
The first tranche, meanwhile, saw SAP snap up roughly 16.3 million shares at an average price of €161.16 apiece — comfortably below where the stock now trades. That means the company is buying back at a higher price in this new round, a detail that hasn't escaped market watchers.
Cloud Numbers Do the Heavy Lifting
Beneath the buyback buzz, the fundamentals have been doing their part. When SAP reported second-quarter results on July 23, the headline metric was a Current Cloud Backlog that surged 27 percent to €22.9 billion — 26 percent on a currency-adjusted basis. Cloud revenues climbed 22 percent (24 percent currency-adjusted), while the flagship Cloud ERP Suite grew 25 percent, or 27 percent excluding currency effects. Total revenue rose 9 percent, or 11 percent adjusted.
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Earnings per share came in at €1.89, up from €1.45 in the year-earlier quarter, according to media reports. Operating profit increased 8 percent under IFRS and 7 percent on a non-IFRS basis (9 percent currency-adjusted). The company also pointed to an improving net margin.
Analysts Trim Targets Despite Bullish Stance
Yet even with that momentum, two research houses have pulled back on their price targets — not because of anything wrong with the cloud engine, but because of near-term cost concerns. Barclays cut its target from €255 to €220 on July 28 while maintaining an "Overweight" rating, citing short-term uncertainty around expense trends. Berenberg followed in the days after the earnings release, trimming from €215 to €205 but keeping a "Buy" recommendation.
Both firms remain on the buy side, but the lowered targets signal they're watching integration costs tied to recent acquisitions more closely. SAP itself adjusted its 2026 non-IFRS operating profit guidance to account for a dilution effect of over €100 million from the Dremio and Prior Labs deals.
The AI Price Tag
Those two acquisitions explain much of the cost-side chatter. SAP closed its purchase of Dremio, an open data lakehouse platform provider, on July 6. Just eleven days later, it wrapped up the acquisition of Prior Labs, a specialist in tabular foundation models. The company plans to invest more than €1 billion over the next four years to turn Prior Labs into a global frontier AI lab for structured data — a strategic bet that analysts broadly support, even as they weigh the near-term earnings drag.
The company has also been fleshing out its AI roadmap with the AI Agent Hub, an initiative aimed at quieting concerns that SAP might fall behind in the artificial intelligence race.
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Regulatory Clouds Lift
On the regulatory front, two potential overhangs have cleared. Germany's Federal Cartel Office concluded its preliminary review of SAP on July 30 without opening an abuse-of-proceedings case. Earlier, on July 9, the European Commission made binding the commitments SAP had offered and closed its antitrust investigation into on-premise maintenance and support without penalties. Both developments give investors added visibility.
A Chart That's Running Hot
Technically, the stock is stretched. The 14-day Relative Strength Index sits at 74.9, a level that suggests the shares are overbought and could be due for a pause. Chart analysts caution that short-term pullbacks can't be ruled out at these levels, even if the fundamental picture remains intact.
Looking ahead, the market's next checkpoint comes on October 21, when SAP reports third-quarter numbers. Consensus estimates point to earnings per share of €1.83 on revenue of €10.09 billion. Until then, the buyback program is likely to remain a key support mechanism for the DAX's most heavily weighted constituent.
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