SAP’s Cloud Backlog Swells to €22.9 Billion as AI Spending Trims the Profit Outlook
Published on 07/28/2026 at 11:21 | Redaktion boerse-global.de
The tension between SAP’s surging cloud business and the mounting cost of its artificial intelligence ambitions has rarely been more visible. The German software giant delivered second-quarter numbers that underscored the strength of its core operations, yet simultaneously trimmed its full-year profit forecast, citing the financial drag from two recent acquisitions and a hefty investment pledge in AI.
Shares jumped 7.29% on Monday to close at €150.74, extending a recovery that has now added roughly 11% over seven trading sessions. The stock added another 1.84% on Tuesday, reaching €153.52, though it remains more than 40% below the 52-week high of €258.60 set last summer. The bounce, while welcome, looks more like a stabilization after a painful slide than a return to former highs.
Cloud Momentum Accelerates
Revenue in the second quarter rose 9% to €9.88 billion, propelled by a 22% jump in cloud revenue to €6.3 billion. The current cloud backlog — contracts already signed and set to convert into revenue — climbed 27% to €22.9 billion, signaling sustained demand that should underpin results for quarters to come. Operating profit increased 7% to €2.74 billion, while adjusted earnings per share improved to €1.89 from €1.46 a year earlier.
The cloud backlog figure, in particular, caught the attention of analysts. Jefferies called it the standout highlight of the quarter, and UBS pointed to an acceleration in short-term cloud contract growth as a key positive. The message from the numbers was clear: the shift to the cloud is not just continuing but gathering pace.
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Guidance Cut, But for Strategic Reasons
Yet alongside the strong operational picture came a revision to the full-year outlook. SAP now expects currency-adjusted operating profit under non-IFRS measures of between €11.8 billion and €12.2 billion, down from a previous ceiling of €12.3 billion. The company attributed the adjustment to dilution from the completed acquisitions of Dremio, a data lakehouse platform, and Prior Labs, a specialist in tabular foundation models for AI.
The two deals, closed in early July and mid-July respectively, are central to SAP’s strategy of embedding AI more deeply into its software stack. The company has announced plans to invest more than €1 billion over the next four years to build out a frontier AI lab. That spending, while strategically defensible, weighs on near-term margins — exactly the dynamic that prompted the guidance trim.
Berenberg analyst Nay Soe Naing cut the price target from €215 to €205 while maintaining a “Buy” rating, citing the rising costs of the AI push as the reason behind the forecast reduction. Goldman Sachs lowered its target from €230 to €215, also keeping a “Buy” rating, with analyst Mohammed Moawalla emphasizing the cloud backlog as evidence of underlying strength. UBS held its “Buy” rating with a €164 target, and Jefferies stuck with “Buy” at €210. The range of targets — from €164 to €215 — all sit above the current share price, but the downward revisions reflect a market that is pricing in the near-term pain of the AI investment cycle.
A New Narrative on AI Monetization
SAP is not just spending on AI — it is also laying out how it plans to make money from it. The company has unveiled plans to monetize new AI agents, a move designed to counter fears that traditional software licensing and subscription models could be eroded by generative AI applications. That concern, sometimes dubbed the “SaaS apocalypse” in industry circles, has weighed on sentiment across the software sector.
By combining a swelling cloud backlog with a concrete AI monetization strategy, SAP is trying to write a different story — one in which AI becomes a revenue driver rather than a margin killer. How much the new agents will contribute financially remains unclear, but the strategic direction is unmistakable.
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The Technical Picture: Recovery, Not Reversal
The recent price action has improved SAP’s technical standing. The stock now trades 6.62% above its 50-day moving average, a sign that the short-term trend has turned positive since the July 23 low of €127.52. But the gap to the all-time high remains wide — roughly 41% — a reminder that the recovery has a long way to go before it can be called a full reversal.
For now, the market appears willing to look past the guidance cut and focus on the cloud momentum. Whether that patience holds will depend on whether SAP can sustain its cloud growth trajectory while the AI investments begin to weigh on margins. The divergence in analyst price targets — cautious at Berenberg, more optimistic at Goldman Sachs — captures that uncertainty precisely.
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