SAP’s Cloud Backlog Beats Forecasts, Yet the Profit Warning Casts a Long Shadow
Published on 07/29/2026 at 17:52 | Redaktion boerse-global.de
SAP shares extended their winning streak on Wednesday, climbing 3.34 percent to €162.76, bringing the seven-session gain to a striking 24.7 percent. The rally comes despite Barclays trimming its price target on the stock, underscoring how deeply divided analysts remain over the software giant’s trajectory.
The divergence in opinion is stark. UBS and Berenberg maintain buy ratings with targets of €164 and €205 respectively, while DZ Bank sticks with a “sell” and a fair value of just €120. HSBC flagged a 66-basis-point contraction in the operating margin to 27.8 percent, driven by an unexpected cost surge — research and development spending jumped 74 basis points to 18.7 percent of revenue. Yet the market has chosen to focus on a different number.
That number is the current cloud backlog (CCB), the most closely watched leading indicator for future cloud revenue. On a currency-adjusted basis, it grew 26 percent in the second quarter, handily beating consensus expectations of 24 to 25 percent and exceeding the estimates of Berenberg, HSBC and Jefferies. The metric now stands at a double-digit billion-euro figure. Berenberg analyst Nay Soe Naing called it a crucial signal that rising AI costs have not yet crowded out demand for SAP’s core software.
The stock has now climbed well above its 50-day moving average of €144.23, a sharp reversal from the 52-week low of €127.52 hit just days earlier. But the 200-day average of €175.47 remains 7.24 percent above the current price, meaning the longer-term downtrend is still intact. The relative strength index has risen to 69.5, flashing an overbought reading, while 30-day volatility sits at 48.44 percent — a recipe for continued large swings.
Should investors sell immediately? Or is it worth buying SAP?
Insider Confidence Meets a €2.6 Billion Buyback
Behind the scenes, management is putting its money where its mouth is. CEO Christian Klein purchased 2,052 SAP shares last week at an average price of €158.49, and board member Thomas Saueressig bought shares worth €70,392 in early July. Major shareholder Harald Tschira has increased his voting rights to 4.22 percent through voting agreements. These insider moves coincide with the launch of the second tranche of SAP’s share buyback program, worth up to €2.6 billion and set to run until January 2027.
The buyback and insider purchases signal conviction that the cloud growth story can offset the margin pressure from recent acquisitions. In July, SAP closed the takeovers of US data platform Dremio and Freiburg-based AI startup Prior Labs, both aimed at strengthening its business AI capabilities. The deals are already weighing on profitability: management trimmed its non-IFRS operating profit forecast for the full year to a range of €11.8 billion to €12.2 billion, down from the previous €11.9 billion to €12.3 billion. The revision reflects dilution from the acquisitions, though the underlying currency-adjusted growth target of 13 to 17 percent remains unchanged.
The Core Question: Can Cloud Growth Outrun Rising Costs?
The bull case rests on the accelerating cloud backlog and the view that integration costs are a temporary drag. Jefferies reaffirmed its “buy” rating with a €210 target, while Berenberg cut its target slightly from €215 to €205 but kept its buy recommendation, arguing that the strong cloud contract backlog relativizes the cost pressure. A third house set a €164 target but explicitly highlighted the acceleration in short-term cloud orders as a positive.
The bear case points to the lowered profit guidance as a canary in the coal mine. If integration costs for Dremio and Prior Labs run higher than anticipated, a further forecast cut could follow. The stock’s distance from its 200-day average — still 8.80 percent below — suggests the medium-term trend has yet to turn. And with volatility elevated, the market is pricing in uncertainty about the true earnings power of the post-acquisition business.
SAP at a turning point? This analysis reveals what investors need to know now.
SAP’s second-quarter revenue rose 9.4 percent to €9.88 billion, driven by currency-adjusted cloud growth of 24 percent. The question now is whether that momentum can hold. For the bulls, the path to the €205–€210 targets remains open as long as cloud growth stays near 24 percent and operating profit lands within the lowered guidance range. For the bears, a cost overrun — or a slowdown in cloud contract signings — could send the stock back toward its 200-day moving average.
The next major checkpoint is the third-quarter earnings report, scheduled for October 21. Until then, investors will be watching the buyback progress and any further signals from the cloud contract pipeline. The rally has been impressive, but the margin story is far from settled.
Ad
SAP Stock: New Analysis - 29 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.
