SAP’s Cloud Backlog Surges to €22.9 Billion, but Acquisition Costs Cloud the Profit Picture
Published on 07/29/2026 at 09:31 | Redaktion boerse-global.de
The past week has been a rollercoaster for SAP investors. After plumbing a 52-week low of €127.52 on the day of its second-quarter earnings release, the stock has staged a sharp recovery, trading at around €159.26 in pre-market activity — a gain of nearly 25% from that trough. Yet for all the recent bounce, the shares remain down roughly 24% year-to-date, and the debate over whether this is a genuine turnaround or a dead-cat bounce is intensifying.
The catalyst for the volatility was a quarterly report that delivered a clear win on the top line but a worrying miss on profitability. SAP’s current cloud backlog — a key forward-looking metric — surged 26% on a currency-adjusted basis to €22.9 billion, handily beating expectations. That figure underscores the enduring appetite for the company’s cloud products and provided the fuel for the subsequent rally. But the good news came with a sting: management trimmed its full-year non-IFRS EBIT guidance to a range of €11.8 billion to €12.2 billion, down from a previous ceiling of €12.3 billion. The culprit, according to the company, is dilution from recent acquisitions.
The Cost of Ambition
Two deals are weighing on the bottom line. SAP closed the acquisition of data-lakehouse platform Dremio in early July, and CFO Dominik Asam has flagged a short-term hit of over €100 million to operating profit in the second half of the year. Then came the July 17 closing of the purchase of AI specialist Prior Labs, into which SAP plans to invest more than €1 billion over the next four years. Both transactions are central to the company’s strategy of building out its “Autonomous Enterprise” and AI capabilities, but they are squeezing margins in the near term.
The market has taken a nuanced view. Barclays lowered its price target from €255 to €220 on Tuesday while maintaining an “Overweight” rating, citing near-term cost uncertainty despite the strong cloud momentum. Jefferies, by contrast, kept a “Buy” rating and a €210 target, with analyst Charles Brennan pointing to the cloud backlog beat as the dominant narrative. On the bearish side, DZ Bank slapped a “Sell” rating on the stock with a €120 target, and Evercore ISI cut its target from €175 to €160 with an “In-Line” call. The divergence reflects a single unresolved question: are these cost pressures temporary integration pains or the start of a structural margin problem?
Should investors sell immediately? Or is it worth buying SAP?
Insider Buying Sends a Signal
Amid the turbulence, CEO Christian Klein put his own money on the line. On July 24, the day after the stock hit its low, he purchased SAP shares worth €325,218.90 at an average price of €133.60, a transaction disclosed to BaFin. Insider buys are often read as a vote of confidence, and this one came at a moment when the market was clearly rattled. The stock’s 30-day annualized volatility stands at 47.81%, reflecting unusually nervous trading.
The company has also been buying back its own shares. On July 27, SAP launched the second tranche of its buyback program, worth up to €2.6 billion, part of the €10 billion program announced in January. That buyback, combined with the CEO’s purchase, has helped stabilize the stock and provided a floor during the recent sell-off.
Technical Picture Still Fragile
Despite the rally, the stock remains 9.23% below its 200-day moving average, a sign that the broader downtrend has not yet been broken. The shares are also 39.10% off their 52-week high, reached in late July 2025. The technical setup suggests that while the bounce has been sharp, a sustained recovery will require more than one good quarter of cloud bookings.
SAP at a turning point? This analysis reveals what investors need to know now.
What’s Next
The next major test comes on October 22, when SAP reports third-quarter results. Investors will be watching closely to see whether the cloud backlog growth translates into improving margins, or whether the drag from Dremio and Prior Labs persists. If the cost pressure proves temporary, the stock could make a run toward the €210–€220 targets set by Jefferies and Barclays, buoyed by the buyback. If the margin weakness looks structural, the more bearish targets from DZ Bank and Evercore ISI will gain credibility, and a retest of the 200-day moving average near €175 — or lower — becomes a real possibility.
For now, SAP has told a compelling growth story. The question is whether the market is willing to pay for it.
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