SAP's Cloud Momentum Meets a Stubborn Earnings Forecast as Goldman Lifts Its Target
Published on 10/24/2026 at 06:31 | Editorial boerse-global.de
Goldman Sachs raised its price target on SAP from 230 to 258 euros yesterday while reaffirming its buy recommendation — a vote of confidence that nonetheless runs up against the one number SAP declined to move: its earnings guidance. Stronger cloud bookings and a more upbeat revenue outlook have not translated into a higher profit forecast, and that gap sits at the heart of how investors are reading the stock.
Two Signals, One Quarter
The market's reaction to the quarterly report captured that tension precisely. Better-than-expected results and cloud signings collided with cautious commentary on the closing quarter, which dpa-AFX attributed to the weak macroeconomic environment. Investors, in turn, pressed on why SAP had not lifted its earnings guidance.
For shareholders, the two layers need separating. Demand trends support a positive read on the business. On expected profits, however, SAP has not backed that optimism with a raised forecast. The higher analyst target is therefore a judgment on the outlook — not an additional commitment from the company.
Backlog Growth and a Note of Caution
The Current Cloud Backlog stood at 24.1 billion euros in the third quarter of 2026, up 26% at constant currencies. Cloud revenue rose 26% to 6.67 billion euros, total revenue reached 10.27 billion euros, and operating profit climbed 18% under both IFRS and Non-IFRS. Management also lifted its outlook for cloud revenue and for combined cloud and software revenue to the upper end of the existing range.
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Yet on Thursday the leadership flagged a possible slight slowdown in cloud backlog growth for the fourth quarter. The distinction matters: that describes a potentially slower pace of expansion, not a decline in the backlog itself. Even so, it caps expectations of further acceleration.
Why the Stock Slipped Despite the Beat
Profit-taking after the share-price recovery weighed on the stock yesterday, according to media reports, compounded by a weak technology sector and cautious analyst commentary on the near-term monetization of artificial intelligence. The pullback came even though the quarter itself beat expectations — a reminder that the strength of the period just ended matters less than the growth rate SAP can sustain through year-end.
Analyst reactions were largely favorable. Goldman's Mohammed Moawalla highlighted the strength of the Current Cloud Backlog and said he expected SAP to keep extending its lead over rivals. Other analysts praised the cloud transformation and the commercial progress of the AI offering. None of that stopped the more cautious expectations for the closing quarter from dominating in the short run.
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The January Test
SAP's next scheduled update — preliminary results for the fourth quarter and for fiscal 2026 — will put the cloud backlog squarely in the spotlight. The two sources differ on the date: one lists 27 January 2027, the other 28 January 2027.
Until then, the key checkpoint is the relationship between growth and profit. Goldman has sent a positive signal with its higher target. SAP has improved its revenue view without raising its earnings guidance. Confirming the more optimistic valuation will take more than another round of good cloud news — it will require an answer on profits. And the crucial line remains the one between slower growth and operational weakness: SAP has signaled the former, while its latest figures still show substantial expansion.
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