SAP’s Cloud Engine Roars, but AI Ambitions Force a Guidance Trim
Published on 07/28/2026 at 08:13 | Redaktion boerse-global.de
The software giant delivered a second-quarter performance that reignited investor enthusiasm, sending shares sharply higher after months of pressure. Yet beneath the headline numbers lies a tension that is becoming familiar across the technology sector: how to balance breakneck cloud growth with the escalating costs of artificial intelligence.
SAP’s stock surged 7.29% on Monday to close at €150.74, marking its strongest single-day gain in months. The rally snapped a prolonged stretch of selling and added to a recovery that has now lifted the shares roughly 11% over seven trading sessions. Even so, the stock remains 41% below its all-time high of €258.60, reached in late July of last year, and trades 14.46% below its 200-day moving average — a reminder that the broader downtrend has yet to be decisively broken.
The catalyst for the move was a set of quarterly figures that beat expectations in the cloud business, the centerpiece of SAP’s long-term strategy. Revenue for the April-to-June period rose 9% to €9.88 billion, while net profit climbed 25% to €2.21 billion, translating to earnings per share of €1.89. Cloud revenue expanded 22%, and the current cloud backlog — contracts already signed — jumped 27% to €22.9 billion. Operating profit increased 7% to €2.74 billion.
That operational strength, however, came with a catch. Management lowered its full-year guidance for operating profit growth to a range of 13% to 17%, down from the previous 14% to 18%. In absolute terms, the company now expects currency-adjusted non-IFRS operating profit of €11.8 billion to €12.2 billion, versus an earlier ceiling of €12.3 billion. The culprit: dilution from two recently completed acquisitions — data-lakehouse platform Dremio, closed in early July, and AI specialist Prior Labs, whose deal went through on July 17. SAP has also committed to investing more than €1 billion over the next four years to turn the unit into a frontier AI laboratory.
Should investors sell immediately? Or is it worth buying SAP?
The guidance cut did not go unnoticed by analysts, but neither did it derail their generally positive view. Goldman Sachs lowered its price target from €230 to €215, maintaining a “Buy” rating. Analyst Mohammed Moawalla pointed to the robust cloud backlog and a strong product pipeline as reasons for continued optimism. Berenberg trimmed its target from €215 to €205, also keeping a “Buy” stance, with analyst Nay Soe Naing citing the rising costs of the AI push as the driver behind the profit warning. UBS held its “Buy” rating and €164 target, highlighting the acceleration in short-term cloud contract growth, while Jefferies kept a “Buy” with a €210 target, calling the cloud backlog the quarter’s standout feature. Across the four houses, price targets now range from €164 to €215 — all above Monday’s close but reflecting a clear markdown from earlier estimates.
The broader market also took note. The DAX rose 1.04% to 25,361.03 points on Monday, buoyed by SAP’s gains alongside a ceasefire in the Iran conflict and a better-than-expected Ifo business climate index.
The AI cost dilemma is not unique to SAP. Across the technology landscape, heavy spending on data centers and AI infrastructure is stirring debate among investors about the trade-off between growth and margins. SAP is also participating in a new industry initiative: Nvidia launched the Open Secure AI Alliance on Monday, a coalition of more than 40 partners including SAP, Microsoft, Siemens, and IBM, backed by the Linux Foundation, to establish common security standards for AI deployment.
SAP at a turning point? This analysis reveals what investors need to know now.
For now, the market has chosen to focus on the cloud engine rather than the margin drag. But the question hanging over the stock is whether this week’s rally marks the beginning of a sustainable recovery or merely a reprieve. The answer will depend on whether SAP can convert its record cloud backlog into consistent earnings growth — and whether the profit guidance cut turns out to be the last adjustment or the first of several.
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