SAP's Rally Has a Speed Problem: Strong Fundamentals, Overbought Charts, and a Street That Can't Agree
Published on 08/07/2026 at 16:41 | Redaktion boerse-global.de
The numbers coming out of Walldorf tell a story of a company firing on all cylinders. The stock chart tells a different one — one of a rebound that may have gotten ahead of itself. And the analysts covering SAP can't seem to decide which story they believe.
That tension is the real narrative behind the software giant's recent surge, which has lifted the shares roughly 38.5 percent from their 52-week low in July. On Thursday, the stock added another 2.28 percent to reach EUR 176.62, extending a rally that has recaptured a significant chunk of the year's earlier losses — though the equity still sits 15.69 percent below its January starting point and remains 31.46 percent off its 52-week high.
The Cloud Engine Keeps Humming
The fundamental case for optimism is hard to argue with. SAP's cloud business grew 22 percent in the second quarter, with short-term billable cloud revenue up 27 percent. The cloud backlog expanded to EUR 22.9 billion, a 27 percent jump that works out to 26 percent on a currency-adjusted basis. Cloud ERP suite revenue climbed 25 percent, total revenue rose 9 percent, and non-IFRS operating profit gained 9 percent in constant currency.
Management's outlook for 2026 calls for record net income of roughly EUR 8 billion, and the company has been leaning into international partnerships — including a push to expand collaboration with Malaysia on that country's digital transformation — to lock in long-term demand.
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There were some adjustments to the guidance, though. SAP now expects non-IFRS operating profit of EUR 11.8 billion to EUR 12.2 billion for the year, trimmed from a prior range of EUR 11.9 billion to EUR 12.3 billion. The roughly EUR 100 million shortfall stems from dilution tied to the July acquisitions of Dremio and Prior Labs — a cost of doing deals rather than a sign of operational weakness.
Regulatory Clouds Clear
Two overhangs that could have weighed on the stock for years have quietly dissolved. On July 9, the European Commission made binding SAP's commitments regarding support services for on-premises ERP software. Then on July 30, Germany's Federal Cartel Office closed its preliminary investigation into the company without opening abuse proceedings, concluding that customers and partners have sufficient technical means to extract their data and that SAP's API policies don't improperly restrict them.
For a company whose valuation has historically carried a regulatory risk premium, having both of those files closed is arguably more significant than any single quarter's results.
A Street Divided
Yet the analyst community is unusually fractured. Barclays trimmed its price target from EUR 255 to EUR 220 in late July while maintaining an "Overweight" rating. JPMorgan's Toby Ogg went much further, cutting his target to EUR 175 and dropping the recommendation entirely. In between, the targets span an extraordinary range: Kepler Cheuvreux at EUR 190, Jefferies at EUR 230, Berenberg at EUR 205 with a buy rating, and UBS at just EUR 164 despite also recommending the stock.
That's a spread of roughly EUR 66 between the most bearish and most bullish targets on the same equity — a level of disagreement that suggests the market is genuinely split on how to weigh the cloud momentum against the margin pressure from recent acquisitions. Of the 31 analysts covering the stock, 27 currently rate it a buy.
The Chart Says: Catch Your Breath
The technical picture adds another layer of caution. The 14-day relative strength index sits at 71.8, above the 70 threshold that traditionally signals overbought conditions. The stock is trading 20.71 percent above its 50-day moving average — an unusually wide gap even for a recovery phase.
But the longer-term view is more nuanced. The shares are just 0.43 percent below their 200-day moving average of EUR 173.15, suggesting the rally has largely restored the stock to its long-term trendline after a deep drawdown rather than pushing it into speculative territory.
The speed of the move is the real concern. A 24.99 percent gain over the past 30 days, following a 38.5 percent advance from the July low in just two weeks, leaves little room for error. A pullback to test the 200-day average as support would be a normal, healthy development — not a sign that the recovery has failed.
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Buybacks Add Fuel
Management appears to share the view that the stock is undervalued. SAP accelerated its share repurchase program sharply in the final week of July, acquiring 2.18 million shares for roughly EUR 344.3 million. The daily pace ramped from about 79,000 shares at the start of the week to over 670,000 by Friday.
That kind of buying provides a floor under the stock even as the chart suggests a pause is likely. With a price-to-earnings ratio of 21.7 — below the company's ten-year average — the valuation doesn't look stretched on a fundamental basis.
There are still risks that could test investor patience. Some large customers, such as the Khimji Ramdas Group, have opted for third-party support providers to avoid the cost and disruption of migrating to S/4HANA. SAP needs to convince the market that the new platform's benefits justify that migration burden.
For existing shareholders, the operating momentum, cleared regulatory hurdles, and aggressive buybacks offer ample reason to stay patient. For those looking to enter now, the divided analyst community and overbought technicals are a reminder that a breather after this kind of run would be anything but unusual.
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