SAP’s Cloud Backlog Hits €22.9 Billion as a Steep Sell-Off Gives Way to a Sharp Reversal
Published on 07/24/2026 at 20:41 | Redaktion boerse-global.de
The wildest swing in SAP’s stock in months came not from a single piece of news, but from the market’s slow digestion of a quarterly report that was both reassuring and unsettling. After tumbling to a fresh 52-week low of €127.52 on Thursday, the shares rebounded with a vengeance on Friday, climbing 8.09 percent to €139.98 — though the secondary source, which recorded a slightly smaller gain of 5.51 percent to €136.64, captured the same underlying story of a dramatic intraweek reversal.
What triggered the about-face was a set of second-quarter numbers that, on balance, painted a picture of a company successfully executing its cloud transition even as it absorbs the short-term costs of two strategic acquisitions. The headline metric that caught investors’ attention was the current cloud backlog — the value of cloud revenue already contracted for the next twelve months — which rose 26 percent on a currency-adjusted basis to €22.9 billion. That figure is widely regarded as the most reliable leading indicator of SAP’s future earnings power, and its double-digit growth provided the foundation for Friday’s rally.
The operating performance in the quarter itself was equally solid. Cloud revenue increased 24 percent on a currency-adjusted basis to €6.28 billion, while total revenue climbed 11 percent to €9.88 billion. Adjusted operating profit rose 9 percent on a currency-adjusted basis to €2.74 billion, a result that came despite heavy investment in artificial-intelligence infrastructure. Chief Executive Christian Klein was quick to link the momentum to the company’s AI strategy, noting that AI products and the SAP Business Data Cloud featured in more than 90 percent of the 50 largest deals closed during the quarter.
Yet the report was not without its complications. SAP slightly trimmed its full-year guidance for adjusted operating profit, narrowing the range to €11.8 billion to €12.2 billion from the previous €11.9 billion to €12.3 billion. Chief Financial Officer Dominik Asam attributed the adjustment entirely to two acquisitions completed in July: the data platform Dremio and the AI startup Prior Labs. Together, the deals are expected to weigh on margins by more than €100 million in the second half of the year. Asam acknowledged that both units would likely generate losses in the near term, prompting a modest downward revision to the 2026 outlook for currency-adjusted operating profit growth, now seen at 13 to 17 percent.
Should investors sell immediately? Or is it worth buying SAP?
Market observers largely read the guidance change as a mechanical consequence of deal-making rather than a sign of operational weakness. The acquisitions are seen as targeted investments in SAP’s “Autonomous Enterprise” strategy, and the company’s own data showed that its AI capabilities were already embedded in the vast majority of its largest quarterly deals. Still, the margin pressure gave ammunition to skeptics: DZ Bank lowered its fair value estimate for the stock to €120 and maintained a sell recommendation, citing the drag from the recent purchases. Barclays and TD Cowen, by contrast, reaffirmed their positive ratings, pointing to the cloud momentum as the more important driver.
A structural tailwind that continues to underpin the cloud transition is the looming 2027 deadline for support of older SAP systems. That cutoff is forcing many large customers to migrate to the S/4HANA cloud suite, and the numbers bear out the effect. While traditional license revenue fell 32 percent on a currency-adjusted basis to €131 million, cloud ERP suite revenue rose 27 percent on the same basis. The shift from a license model to a subscription model is clearly accelerating, even if it temporarily depresses reported revenue from the legacy business.
Despite Friday’s bounce, the year-to-date performance remains deeply negative. The stock has lost 32.81 percent since the start of 2025, according to the primary source, while the secondary source put the decline at 34.42 percent — a discrepancy that reflects different closing prices used for the calculation but does not change the broader picture of a stock that has been under severe pressure. The move back above €130 was nonetheless viewed by traders as a technically important signal, suggesting that the selling may have been overdone.
Valuation offers some perspective on the debate. With a price-to-earnings ratio of roughly 19 based on 2026 earnings estimates, the stock is not expensive by historical standards. KeyBanc recently reiterated a buy rating with a price target of €235, a level that implies substantial upside from current levels. The analyst consensus, however, is far from uniform, reflecting the tension between the cloud growth story and the margin headwinds from the acquisition spree.
SAP at a turning point? This analysis reveals what investors need to know now.
The broader context for Friday’s rally was a generally positive session for European technology stocks, though SAP’s move stood out in magnitude. The company’s ability to generate a 26 percent increase in its cloud backlog while simultaneously absorbing the cost of two sizable acquisitions suggests that the underlying business is gaining traction even as the market remains skeptical about the near-term financial impact. For investors, the question is whether the Dremio and Prior Labs deals will prove to be the kind of strategic bolt-ons that accelerate the AI roadmap, or whether they will become a persistent drag on margins that keeps the stock range-bound.
For now, the market has chosen to focus on the backlog and the cloud growth, treating the guidance trim as a temporary inconvenience rather than a red flag. Whether that judgment holds will depend on how quickly the acquired businesses can be integrated and whether the cloud momentum can sustain its current pace through the second half of the year.
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