SAP’s Record Cloud Backlog Lifts the Stock, but the Margin Math Gets Trickier
Published on 07/26/2026 at 09:13 | Redaktion boerse-global.de
SAP’s share price staged a dramatic reversal on Friday, surging 9.15 percent to close at €140.80 just 24 hours after plumbing a new 52-week low of €127.52. The whipsaw came after the German software giant published second-quarter results that erased a key fear hanging over the stock — that artificial intelligence investments would throttle cloud growth — while simultaneously introducing a fresh concern about near-term profitability.
The cloud business delivered the headline relief. Revenue from cloud subscriptions climbed 24 percent to €6.28 billion in the quarter, and the current cloud backlog — the contracted order book for the next twelve months — expanded 27 percent to a record €22.9 billion. Currency-adjusted, that backlog growth stood at 26 percent. Management said AI solutions played a direct role in more than 90 percent of the largest deals closed during the period, reinforcing the narrative that its “autonomous enterprise” strategy is gaining traction with corporate clients.
Yet the same earnings release contained a note of caution that tempered the enthusiasm. SAP trimmed its full-year 2026 operating profit guidance under non-IFRS measures to a range of €11.8 billion to €12.2 billion, down from the previous band of €11.9 billion to €12.3 billion. That translates to EBIT growth of 13 to 17 percent, versus the earlier forecast of 14 to 18 percent. The cloud revenue outlook of €25.8 billion to €26.2 billion was left unchanged.
The profit revision is not a reflection of weakening demand. SAP attributed the downgrade entirely to dilution from two recently completed acquisitions: Dremio and Prior Labs, both closed in July. The deals are intended to bolster the company’s data capabilities and its “Business AI Platform,” but they come with integration costs that are weighing on margins in the near term. JPMorgan analyst Toby Ogg, who maintained a “Neutral” rating and a €175 price target, called the margin decline in the quarter an outright negative surprise.
Should investors sell immediately? Or is it worth buying SAP?
The contrasting signals have split analyst opinion. Jefferies’ Charles Brennan reiterated a “Buy” with a €210 target, pointing to cloud subscription momentum that exceeded expectations. Other houses have price targets ranging from €164 to €200, underscoring the uncertainty over how quickly the acquisition drag will fade. For the bull case to hold, the cloud backlog — which provides strong revenue visibility for coming quarters — must convert into billings without requiring another downward revision to the profit forecast.
A notable vote of confidence came from inside the company. CEO Christian Klein purchased SAP shares worth €325,219 at an average price of around €133.60 immediately after the results were released, following CFO Dominik Asam’s own share purchase in January at €169.20. The company’s €10 billion share buyback program, running through the end of 2027, also remains active. The first tranche of roughly €2.6 billion covering 16.28 million shares has already been completed, and with the quiet period now ended, SAP can resume open-market purchases that could provide additional support to the stock.
Despite Friday’s rally, the shares still trade 18.98 percent below their 200-day moving average of €173.78, and they remain a long way from the all-time high of €254.15. The 42 percent decline over the past twelve months reflects a market that has been pricing in considerable headwinds. A separate regulatory overhang lifted in early July when the European Commission closed its competition review of SAP’s maintenance and support policies for on-premise software without taking further action.
SAP at a turning point? This analysis reveals what investors need to know now.
The next real test comes with the third-quarter report, when investors will see whether the integration of Dremio and Prior Labs continues to pressure margins or whether the cloud growth story reasserts itself. For now, the record backlog has bought SAP some breathing room, but the margin math remains the central question that will determine whether Friday’s surge marks the start of a sustained recovery or merely a sharp bounce in a longer downtrend.
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