SAP’s Cloud Backlog Hits €22.9 Billion, but the Rally Faces a Test From AI Costs
Published on 07/27/2026 at 21:51 | Redaktion boerse-global.de
The software giant has staged a dramatic rebound from a multi-year low, but the path to a full recovery remains strewn with questions about margins, acquisitions, and the price of artificial intelligence leadership.
SAP shares surged 7.84 percent on Monday to €151.84, extending a rally that began after the company released its second-quarter results on Thursday evening. The stock had touched a 52-week trough of €127.52 just days earlier, on July 23, leaving it roughly 40 percent below its year-high of €254.15. Monday’s gain — the second consecutive double-digit percentage move for the DAX heavyweight — pushed the shares back above the 50-day moving average of €144.00, a level that chart watchers say must hold for the recovery to gain traction.
The catalyst is unmistakable: SAP’s current cloud backlog, the most closely watched leading indicator for future subscription revenue, expanded 27 percent to €22.9 billion. On a currency-adjusted basis, the CCB grew 26 percent, comfortably above the 24 to 25 percent that analysts at Berenberg, HSBC, and Jefferies had penciled in. Cloud revenue itself rose 22 percent, or 24 percent adjusted for currency effects, while total group revenue increased a more modest 9 percent (11 percent constant currency).
Yet the euphoria is tempered by a familiar tension. The costs associated with building out artificial intelligence capabilities are eating into profitability, and management has trimmed its outlook for full-year adjusted operating profit to a range of €11.8 billion to €12.2 billion. The revision partly reflects dilution from two recent acquisitions — Dremio and Prior Labs — that SAP is betting will strengthen its pricing power in the AI ecosystem but that, in the near term, weigh on margins.
Should investors sell immediately? Or is it worth buying SAP?
Analyst Views Diverge on Valuation
The investment community remains split on where the stock goes from here. Berenberg’s Nay Soe Naing reiterated a buy rating but cut the price target from €215 to €205, arguing that rising AI costs have not yet displaced demand for SAP’s core software. HSBC’s Abhishek Shukla lifted his target from €185 to €196, noting that cloud migration is accelerating faster than expected and that his fair-value estimate for the shares stands at €287 — implying SAP currently trades at just 45 percent of that level. Jefferies’ Charles Brennan kept a buy rating and a €210 target, saying order intake matters more to investors than short-term profit fluctuations.
On the more cautious side, JPMorgan rates the stock neutral with a €175 target, while UBS maintains a buy but with a target of €164. The wide dispersion — targets range from €164 to €210 — underscores the market’s difficulty in pricing a company caught between robust cloud momentum and the capital intensity of the AI transition.
Technical Picture Brightens, but Risks Remain
Monday’s close above the 50-day moving average is a positive signal for momentum traders. The relative strength index stands at 60.6, suggesting the stock is not yet overbought despite a 7.58 percent gain over the past seven sessions. The 100-day moving average at €147.53 was breached during intraday trading, and a sustained move toward the 200-day line at €173.35 — roughly 16 percent above current levels — would constitute a durable buy signal.
But the recovery remains fragile. On a 12-month basis, SAP is still down nearly 39 percent. The stock’s 30-day annualized volatility of 46.93 percent points to deep unease among investors, and bearish voices warn that specialized AI applications could erode the traditional moats that have protected enterprise resource planning systems. If customers delay adopting SAP’s AI agents, the current cloud enthusiasm could dissipate quickly.
SAP at a turning point? This analysis reveals what investors need to know now.
What Comes Next
The next major milestone is the third-quarter report, scheduled for October 21. Until then, the market will focus on two questions: Can SAP leverage the cost efficiencies from its completed restructuring program to offset the drag from AI investments? And will the Dremio and Prior Labs acquisitions begin to show strategic value, or will they remain a drag on operating margins through the transition year?
For now, the €22.9 billion cloud backlog provides a powerful narrative of demand. But the stock’s ability to hold above the 50-day moving average — and eventually challenge the 200-day line — will depend on whether that narrative can coexist with a profit outlook that has already been trimmed once.
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SAP Stock: New Analysis - 27 July
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