SAP’s €22.9 Billion Cloud Backlog Steals the Show as AI Acquisition Costs Force a Guidance Cut
Published on 07/28/2026 at 14:32 | Redaktion boerse-global.de
The market has delivered a split verdict on SAP’s second-quarter performance, rewarding the software giant for its surging cloud pipeline while largely shrugging off a trimmed profit forecast. Shares climbed 2.24% on Tuesday, extending a seven-day recovery that has already added 13.44% — though the stock still trades 12.34% below its 200-day moving average of €175.82, underscoring just how far the rebound has to go.
Cloud Orders Hit a New High
The headline number that has analysts buzzing is the current cloud backlog, which jumped 27% year-on-year to €22.9 billion as of June 30. This metric, which captures contracted but not yet recognized cloud revenue, is widely viewed as the most reliable leading indicator for future sales. Cloud revenue itself rose 24% on a currency-adjusted basis to €6.28 billion, while total group revenue climbed to €9.88 billion from €9.03 billion in the same period last year.
The cloud momentum is unmistakable. Jefferies analyst Charles Brennan described the backlog as a “clear highlight” that comfortably exceeded market expectations. UBS echoed that sentiment, pointing to an acceleration in short-term cloud commitments as a key positive takeaway.
The Cost of Ambition
Yet the rosy picture comes with a catch. SAP’s adjusted operating profit landed at €2.74 billion — a 7% improvement year-on-year but well short of the €2.91 billion analysts had penciled in. The miss prompted management to lower its full-year guidance for currency-adjusted operating profit under non-IFRS to a range of €11.8 billion to €12.2 billion, down from a previous ceiling of €12.3 billion.
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The culprit, according to SAP, is the integration cost of two recently completed acquisitions: Dremio, a data lakehouse platform, and Prior Labs, a Vienna-based AI startup specializing in tabular foundation models. Together, the deals cost over €1 billion. SAP has committed to pouring more than €1 billion into building a frontier AI lab over the next four years — a strategic bet that management insists is necessary but one that clearly weighs on near-term margins.
JPMorgan’s Toby Ogg called the margin development in the second quarter a “negative surprise,” capturing the tension that now defines the investment case: a booming cloud business offset by rising integration expenses from M&A.
Analyst Reactions: Lower Targets, Same Conviction
The analyst community has responded with a mix of caution and continued optimism. Several major houses trimmed their price targets while maintaining buy ratings:
- Goldman Sachs cut its target from €230 to €215, keeping a “Buy” rating. Analyst Mohammed Moawalla pointed to the robust cloud backlog as evidence of underlying operational strength.
- Berenberg lowered its target to €205 from €215, also retaining “Buy.” Analyst Nay Soe Naing attributed the revision to the rising costs of SAP’s AI offensive — precisely the factor behind the company’s own guidance cut.
- Jefferies held its “Buy” rating and €210 target, reiterating the cloud backlog as the quarter’s standout feature.
- UBS kept “Buy” with a €164 target, emphasizing the acceleration in short-term cloud commitments.
The revised price targets range from €164 to €215, all above Monday’s closing price of €150.74 — which itself represented a 7.29% single-day surge. The message from the Street is consistent: the cloud business is firing on all cylinders, but the cost of the AI pivot has eroded confidence in near-term earnings visibility.
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Chart Talk: Recovery or Dead Cat Bounce?
Despite the recent rally, the technical picture remains fragile. The stock closed at €150.74 on Monday, still 41% below its all-time high of €258.60 reached in late July last year. The current uptick has lifted shares more than 20% from the recent low of €127.52, but the distance to the 200-day moving average — a key gauge of long-term trend — is a sobering 12.34%.
Investors are left weighing whether the acquisition-related margin pressure is a temporary blip or a structural drag. The next major checkpoint comes on October 21, when SAP reports third-quarter results. Until then, the cloud backlog will remain the most closely watched metric — and the strongest argument that the company’s core business is in far better shape than the stock price suggests.
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