SAP's Record Quarter Draws a Raised Target, a Courtroom Caveat and a Cautious Market
Published on 10/22/2026 at 14:01 | Editorial boerse-global.de
Oddo BHF lifted its price target on SAP to €242 on Thursday, hours after the Walldorf group posted its strongest quarterly topline on record. Analyst Nicolas David pointed to the cloud order book as the main justification for the more bullish valuation. The market, however, refused to play along: the stock touched a fresh high for the year in early trading before fading, with dpa-AFX attributing the retreat to a weak broader tape and pressure on AI-related names.
Contracted business carries the valuation case
At the heart of David's upgrade is the current cloud backlog, which stood at €24.144bn at the end of the third quarter of 2026 — a currency-adjusted increase of 26%. That figure looks past revenue already booked and toward contracts signed but not yet recognised, which is why it matters more to the analyst than the completed quarter alone.
The numbers published on Wednesday bear out the momentum. Cloud revenue climbed 26% to €6.668bn, while total quarterly revenue reached €10.270bn. According to Reuters, it was the first time the group has cleared the €10bn mark in a single quarter. CEO Christian Klein framed artificial intelligence as the decisive driver behind customers moving to the cloud, tying SAP's growth story explicitly to demand for AI applications.
A split verdict on the quarter
The headline growth rate deserves a closer look. Group revenue rose 13% to €10.27bn, meaning the cloud unit expanded at roughly twice the pace of the business as a whole — the gap that explains why investors fixate on cloud metrics rather than the aggregate figure. The current cloud backlog grew 28% on the company's own measure, and IFRS operating profit advanced 18%.
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Guidance came with a nuance that is easy to miss. SAP now expects both cloud revenue and combined cloud and software revenue to land at the upper end of its existing ranges, yet it did not raise the corresponding earnings corridor. The non-IFRS operating profit outlook for 2026 remains €11.8bn to €12.2bn. Greater confidence on the top line, in other words, has not been matched by a lift to the bottom-line target.
Munich ruling cuts a narrow path
Against that operating backdrop sits a legal setback. On Monday, reports emerged that the Munich I regional court had enjoined a specific function of Signavio Process Intelligence in Germany, ruling in favour of Celonis on a patent claim. SAP said it has lodged an appeal. The decision covers one feature in one market, not the group's product portfolio as a whole — a distinction that matters when weighing the risk, and one that an appeal does not erase.
The stock nevertheless added 2.0% on Wednesday, with dpa-AFX citing the strong cloud business and the more optimistic revenue outlook as the trigger. Thursday's target increase and the subsequent pullback need not contradict each other: analyst revisions and intraday trading simply weigh different things.
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The fourth quarter is where the story gets settled
CFO Dominik Asam used the analyst call to flag risks to the fourth quarter given the soft economic environment. Roughly half of annual bookings typically land in the closing three months, according to dpa-AFX — a concentration that turns the year-end into the real test of whether the order-book strength persists.
The backlog gives Oddo BHF its argument for a higher target, but it does not dissolve the macroeconomic concerns Asam raised. SAP reports fourth-quarter and full-year 2026 results on 28 January 2027.
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