SAP’s €2.6 Billion Buyback and Cloud Surge Put the Spotlight Back on Margins
Published on 07/28/2026 at 03:30 | Redaktion boerse-global.de
The software giant’s shares jumped more than 7% on Monday, closing at €150.74, as investors digested a dense stretch of corporate events. Just days after reporting second-quarter results, SAP launched the second tranche of its massive share repurchase program—up to €2.6 billion for roughly 18.5 million shares on Xetra, running through January 27, 2027. The buyback removes stock from the market and provides technical support, but the real debate centers on whether the company’s cloud momentum can outrun the rising costs of its AI push.
The rally marks a sharp reversal from last Thursday, when the stock hit a 52-week low of €127.52. Even after the bounce, SAP remains roughly 14.5% below its 200-day moving average and deep in the red for the year. On a twelve-month basis, the shares are still down nearly 39%.
Cloud Orders Tell One Story, Costs Tell Another
The headline number that has bulls excited is the current cloud backlog, which surged 27% to €22.9 billion. Cloud revenue climbed 22% to €6.3 billion, while total revenue rose 9% to €9.88 billion. The backlog signals that customer migration to S/4HANA Cloud is accelerating despite macroeconomic headwinds, and analysts at Jefferies reiterated a Buy rating with a €210 price target, noting the cloud order book beat market expectations. Goldman Sachs and Deutsche Bank also reaffirmed positive views, pointing to sustained momentum in the cloud ERP suite.
But the picture is more complicated than top-line growth suggests. Management adjusted its 2026 non-IFRS operating profit guidance to account for the dilutive effects of two recently closed acquisitions—Dremio and Prior Labs, both completed in July. The revised forecast now sits at €11.8 billion to €12.2 billion. Berenberg cut its price target on July 27, citing rising cost pressure from accelerated AI integration into core products, and rates the stock a Hold. JPMorgan maintained a Neutral stance with a €175 target, flagging the quarter-over-quarter margin weakness as a critical concern.
Should investors sell immediately? Or is it worth buying SAP?
The tension is straightforward: the cloud backlog provides the bull case, while the trimmed profit outlook gives skeptics ammunition. Both sides are reading the same numbers, just weighting them differently.
Buyback Adds a Technical Tailwind
The €2.6 billion repurchase program adds a mechanical bid to the stock, reducing the float at a time when sentiment is already improving. That combination helped drive Monday’s 7.3% gain, which pushed the shares above the 50-day moving average at €144. The relative strength index sits at 60.6, suggesting there is room for further upside before the stock becomes overbought.
Yet the recovery remains fragile. The stock’s 30-day annualized volatility stands at roughly 47%, reflecting deep uncertainty among investors. And while the intraday move on Monday briefly cleared the 100-day moving average near €147.53, a sustained breakout would require a push toward the 200-day line at €173.35—a further rally of about 16% from current levels.
The Two Questions That Will Decide the Next Move
For the rally to continue, two things need to hold. First, the cloud backlog must maintain its growth trajectory, proving that the Dremio and Prior Labs acquisitions are temporary margin drags rather than structural profit killers. The expanded partnership with Nokia and Microsoft, announced in late June to accelerate AI transformation in industrial cloud networks, could provide additional growth fuel if it translates into new revenue streams.
SAP at a turning point? This analysis reveals what investors need to know now.
Second, the cost side needs to stabilize. The adjusted profit guidance already reflects the near-term pain of integrating AI capabilities into core products. If specialized AI applications begin to erode the traditional moats of ERP systems—a risk that bears are watching closely—the current cloud euphoria could fade quickly.
The next concrete test comes on October 21, when SAP reports third-quarter results. By then, investors will have a clearer read on whether the integration of Dremio and Prior Labs is indeed a short-term burden or a sign of deeper margin pressure. Until then, the stock is caught between a €22.9 billion cloud backlog that argues for higher prices and a profit outlook that demands patience.
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