SAP’s €22.9 Billion Cloud Backlog Sparks a Rally, but the Cost of AI Ambitions Looms
Published on 07/29/2026 at 06:21 | Redaktion boerse-global.de
The Walldorf-based software giant has clawed back more than 20 percent in just seven trading sessions, yet the year-to-date picture remains ugly — shares are still down nearly 25 percent since January. After plumbing a 52-week low of €127.52 on July 23, SAP closed Tuesday at €157.50, its highest level in seven weeks. The question dividing the market: Is this the start of a genuine turnaround, or merely a technical bounce within a broader downtrend?
The Cloud Engine Roars, but Margins Feel the Squeeze
The trigger for the rebound was a quarterly update that landed after the close on the day of the trough. The current cloud backlog — a key forward-looking metric — jumped 26 percent on a currency-adjusted basis to €22.9 billion, handily beating analyst expectations. That figure helped calm fears that SAP’s artificial intelligence push was gaining traction too slowly.
Yet the numbers came with a catch. Adjusted operating profit under non-IFRS rules rose 9 percent in the second quarter to €2.74 billion, slightly missing consensus. More tellingly, SAP trimmed its 2026 guidance for adjusted operating profit to a range of €11.8 billion to €12.2 billion, down from an earlier ceiling of €12.3 billion. The company blamed dilution from recent acquisitions — specifically, two deals that underscore its aggressive AI and data strategy.
In early July, SAP closed the purchase of data-lakehouse platform Dremio. CFO Dominik Asam put the near-term hit to second-half operating profit at more than €100 million. Mid-July brought the completion of the Prior Labs acquisition, an AI specialist into which SAP plans to pour over €1 billion in integration costs over the next four years. Both transactions signal a company racing to embed AI into its core offerings, but the price tag is showing up in the profit-and-loss statement today.
Should investors sell immediately? Or is it worth buying SAP?
A CEO’s Vote of Confidence
Christian Klein put his own money on the line the day after the stock hit its low. On July 24, SAP’s chief executive purchased company shares worth €325,218.90 at an average price of €133.60, a transaction disclosed to German regulators. Insider buying at such a moment was widely read as a signal that management sees the selloff as overdone and remains confident in the long-term strategy.
Chart Levels and Analyst Divergence
From a technical perspective, the next big test sits at €175.83 — the 200-day moving average. That represents a further 10 percent upside from current levels. The relative strength index at 66.3 suggests the stock is heating up but not yet in overbought territory, leaving room for more gains if momentum holds.
Analyst opinions, however, are split. Charles Brennan at Jefferies reiterated a “Buy” rating with a €210 price target, arguing that the strong cloud backlog validates SAP’s strategic pivot and should outweigh near-term cost concerns. Barclays, by contrast, trimmed its price target from €255 to €220 last week while maintaining an “Overweight” rating, citing lingering uncertainty around the cost structure.
The Macro Shadow
The bigger risk may not be company-specific at all. The Nasdaq 100 has been in correction mode since June, with heavyweight Nvidia shedding roughly 20 percent since May. Wednesday brings earnings from Meta and Microsoft alongside the Federal Reserve’s interest-rate decision. If those events amplify worries about runaway AI investment costs, SAP could find itself caught in the downdraft despite its own solid fundamentals.
Should the stock fail to break through resistance at €175.83, a retreat toward the 50-day moving average of €144.06 becomes a real possibility. That would turn the current rally into little more than a dead-cat bounce within a larger bear phase.
SAP at a turning point? This analysis reveals what investors need to know now.
What Comes Next
The immediate trajectory hinges on the Fed’s message and how the US tech earnings season plays out. If sentiment in the global software sector holds, a test of the 200-day line looks plausible, and a clean break above it would signal a genuine trend change. If hyperscaler outlooks disappoint, the rally likely fades.
The next concrete checkpoint for SAP’s own story arrives on October 22, when third-quarter results will show whether the cloud momentum is translating into sustainable profit improvement — or whether the acquisition bill keeps eating into the bottom line.
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