SAP’s 10-Billion-Euro Buyback and Cloud Growth Face a Reckoning on July 23
27.06.2026 - 14:16:44 | boerse-global.de
When SAP launched its €10 billion share repurchase program back in January, the stock was trading well above €160. By the end of June, the buyback had already absorbed 16.3 million shares at an average price of €161.16 — a level that now looks almost generous. With the shares languishing at €136.16 after Friday’s 3.92% bounce, the ongoing buyback is providing a structural floor, but one that will be severely tested when the German software giant unveils second-quarter results on July 23.
The stock has lost roughly 49% from its July 2025 peak and sits about 25% below its 200-day moving average. The selloff has been orderly rather than panicked: trading volumes recently dropped to about a quarter of typical levels, suggesting a steady drip of impatient investors rather than a rush for the exit. Yet the market’s skepticism is palpable. Even strong numbers in the first quarter failed to stop the slide — total revenue rose 6% to €9.56 billion, cloud revenue surged 27% on a currency-adjusted basis to nearly €6 billion, and the current cloud backlog reached €21.9 billion. The message from Walldorf needs to be that Q2 can replicate that momentum without the one-off tailwind that flattered the first quarter.
Analysts remain surprisingly bullish, even after the drubbing. The average price target from nine surveyed analysts stands at €221.25, implying upside of roughly 60% from current levels. UBS is sticking with a “buy” rating and a €205 target, expecting margin improvements to shine through. Jefferies recently trimmed its target from €230 to €210 but kept a buy recommendation, attributing the caution to a weak environment for European software stocks rather than any SAP-specific flaw. Berenberg sees fair value at €215. But the bull case is far from unanimous: JP Morgan is neutral, the DZ Bank switched to a sell recommendation in April, and Morningstar — while awarding the stock five stars as “significantly undervalued” — acknowledges a durable competitive advantage.
Should investors sell immediately? Or is it worth buying SAP?
One factor feeding the bearish mood came directly from the CEO. Christian Klein warned in a recent interview that in three or four years “nobody will develop software anymore,” fanning fears about the erosion of traditional licensing models. The comment reinforced concerns that generative AI could upend the entire software industry, a risk the market has been pricing in aggressively even as the company continues to invest heavily in its cloud transition. Add to that the pending acquisitions of Dremio and Prior Labs — expected to close in the second or third quarter of 2026 and financed in late May through €3.5 billion in Eurobonds across four tranches — and the Q2 report will offer the first chance for investors to assess whether those deals are on track.
A quieter positive development has been the regulatory front. In June, the Federal Office for Information Security granted SAP’s Cloud Infrastructure in Walldorf approval to handle classified information at the VS-NfD (only for official use) level. SAP claims to be the only provider able to run both its own and customer applications in a VS-NfD-compliant environment. The certification is a building block toward full ISO 27001 accreditation based on IT-Grundschutz, and over time could open up significant government and defence business. A recent ISG study underscored the trend: German companies are accelerating S/4HANA migrations with greater use of AI automation, and the report evaluated 41 providers, highlighting the depth of SAP’s ecosystem.
For now, though, the narrative is dominated by the price chart and the earnings event. The quiet period has been in force since June 22, meaning no official guidance or commentary until the numbers are released at 22:05 CEST on July 23, followed by an analyst call at 23:00. If SAP can confirm the operating strength it showed in Q1 — despite the absent one-off effect — the market may be forced to reconsider whether a near-50% decline is an overreaction. The buyback, the BSI certification, and the cloud backlog all provide foundations for a recovery. Whether that recovery begins in July depends on the numbers Walldorf delivers.
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