SAP's €22.9 Billion Cloud Backlog Fuels a 9% Rally, but the Profit Outlook Has a Catch
Published on 07/26/2026 at 18:05 | Redaktion boerse-global.de
The market’s verdict on SAP’s latest quarterly numbers came through loud and clear on Friday: a 9.15 percent surge that pushed the stock to €140.80, marking one of its strongest single-day performances in years. Investors seized on a cloud backlog that swelled 27 percent to €22.9 billion and cloud revenue that climbed 22 percent to €6.28 billion — or 24 percent in currency-adjusted terms. Total revenue rose 9 percent to €9.88 billion, and the cloud ERP suite posted a 25 percent jump in sales.
Yet the euphoria masks a tension that has split analyst opinion and left the stock still trading nearly 19 percent below its 200-day moving average. SAP simultaneously trimmed its full-year non-IFRS operating profit forecast to a range of €11.8 billion to €12.2 billion, down from a previous ceiling of €12.3 billion. The culprit: dilution from the recently completed acquisitions of Dremio and Prior Labs, two deals that are central to SAP’s AI strategy but are weighing on near-term profitability.
A CEO’s Bet on His Own Strategy
Christian Klein, SAP’s chief executive, added a personal dimension to the narrative. In a mandatory disclosure, he bought SAP shares worth €325,218.90 just ahead of the earnings release — a move widely interpreted as a vote of confidence in the company’s direction. The purchase came days after SAP announced that Airbus would deploy “RISE with SAP” in a sovereign cloud operating model for its core processes, adding a marquee name to the customer roster.
Klein’s timing was notable. He had already taken direct oversight of key technology and product development areas as of July 1, signaling a hands-on approach as SAP navigates its cloud transition. The CEO’s share purchase, combined with the Airbus win, helped underpin the bullish case that the cloud backlog’s momentum will eventually overwhelm the short-term margin drag.
Should investors sell immediately? Or is it worth buying SAP?
Analysts Split on the Cloud-Margin Trade-Off
The divergence on Wall Street and in Frankfurt was stark. Jefferies analyst Charles Brennan reaffirmed a “Buy” rating with a €210 price target, citing cloud order momentum that exceeded expectations. Deutsche Bank Research kept its “Buy” and €200 target, forecasting an acceleration in growth by 2027. JPMorgan’s Toby Ogg held at “Neutral” with a €175 target, calling the slight margin decline a negative surprise. At the bearish end, DZ Bank slashed its target from €130 to €120 with a “Sell” rating, voicing skepticism about near-term margin capacity despite the cloud progress. Evercore ISI trimmed its target to €160 from €175, maintaining an “In-Line” stance.
The spread — from €120 to €210 — reflects a fundamental debate: Can SAP convert its swelling order book into profitable revenue faster than its acquisition spree eats into earnings? The €22.9 billion backlog represents business already under contract, but the integration of Prior Labs, a Freiburg-based AI startup acquired on July 17, and Dremio will require time and investment before they contribute to the bottom line.
AI Ambitions and Regulatory Tailwinds
SAP’s acquisition strategy is squarely aimed at embedding artificial intelligence deeper into its enterprise resource planning software. Prior Labs will operate as a standalone frontier-AI lab for structured data, while new AI-powered features within “RISE with SAP” and “SAP GROW” were announced earlier this month. A strategic partnership with Nokia and Microsoft, unveiled in late June, adds another layer to the cloud and AI transformation push.
On the regulatory front, the European Commission concluded its review of maintenance and support guidelines for on-premise solutions in early July, removing a risk that had hung over SAP’s legacy service models. That clearance, combined with the Airbus sovereign-cloud deal, suggests SAP is navigating both the technology and compliance dimensions of its cloud shift.
SAP at a turning point? This analysis reveals what investors need to know now.
The October Checkpoint
Despite the Friday rally, the stock remains 18.98 percent below its 200-day average, a technical indicator that the long-term downtrend has yet to reverse. Annualized volatility sits at 43.48 percent, underscoring the shares’ sensitivity to quarterly surprises.
The next concrete test arrives on October 21, when SAP reports third-quarter and nine-month results. By then, investors will have a clearer picture of whether the cloud backlog is converting into revenue and margin at the pace needed to justify the current valuation — or whether the acquisition-related drag will persist, potentially sending the stock back toward its 52-week low. For now, the market has chosen to bet on the backlog. The margin math will decide whether that bet pays off.
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