SAP’s $10 Billion Buyback Fails to Halt the Selloff as Margin Squeeze and EU Probe Loom
Published on 06/29/2026 at 06:31 | Redaktion boerse-global.de
SAP is spending billions to prop up its own stock, yet the shares keep sliding. The German software giant has repurchased its equity at an average price north of €161 per share — well above Friday’s close of €136.16. The first tranche, worth up to €2.6 billion, has done little to stem the bleeding. Over the past twelve months, SAP has lost roughly 47% of its market value, and the year-to-date decline of 33% makes it one of the worst performers in the European technology sector.
The disconnect between operational strength and stock price has rarely been wider. In the first quarter, SAP posted a 20% jump in cloud orders. Cash is flowing, yet the market is fixated on what that growth costs.
Margin Pressure Bites
Goldman Sachs has trimmed its second-half 2026 gross margin forecast for SAP to 72.8%, down from 73.3%. The reason is clear: the company is spending heavily on cloud infrastructure and integrating new artificial-intelligence services. This expansion is absorbing capital at a time when rivals like Oracle have unveiled investment plans of up to $95 billion, while Accenture recently cut its revenue outlook — a warning sign for the entire enterprise software ecosystem, since Accenture implements many SAP systems.
SAP is also pursuing inorganic growth. It plans to close the acquisition of Dremio in the third quarter of 2026 and has committed a multi-billion-euro investment in Prior Labs over four years to strengthen its data analytics position. These moves may bolster long-term competitiveness, but they weigh on near-term margins.
Should investors sell immediately? Or is it worth buying SAP?
A Buyback That Isn’t Working
The scale of the buyback is eye-catching. The current program runs through 2027 and totals up to €10 billion. But the average repurchase price of roughly €161 — set when the stock was trading far higher — means SAP is buying at a premium to today’s level. Observers question the timing and effectiveness of the operation. So far, it has failed to arrest the downtrend; the shares closed Friday only 4% above their 52-week low of €130.80.
Technical analysts note that the stock remains well below its 50-day moving average of €147.48 and even further from the still-distant 200-day line. As long as these levels hold, the chart pattern stays bearish.
Regulatory Cloud Lifts Slightly
A European Commission antitrust probe has added another layer of uncertainty. Brussels is reviewing commitments from SAP to resolve allegations that it hindered competition in enterprise software support. The company has offered clients more flexibility in licensing, and an out-of-court settlement is seen as likely. If the EU accepts the concessions, one political risk would be removed, but the process is still unfolding.
Waiting for July 23
SAP is now in its quiet period ahead of the second-quarter earnings release on July 23, 2026. Management cannot comment on estimates, so all attention will be on the numbers themselves. The market wants to see if cloud growth can be profitable, not just large. A strong cloud backlog alone will no longer suffice; investors demand clear signs of stable profitability.
SAP at a turning point? This analysis reveals what investors need to know now.
Despite the gloom, analyst consensus remains bullish. The average price target among nine analysts is around €219, implying more than 60% upside from current levels. Goldman Sachs and Jefferies both maintain buy ratings, with Jefferies recently trimming its target to €210. They argue that SAP’s AI strategy is intact and that the current selloff is overdone.
But the next few weeks are decisive. If the July 23 report shows that cloud momentum persists without destroying margins, the stock could finally find a floor. If not, not even a €10 billion buyback will be enough to stop the slide.
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