SAP’s Cloud Earnings Test Arrives with a €1B Acquisition in Hand and a Bearish Chart to Overcome
Published on 07/20/2026 at 16:13 | Redaktion boerse-global.de
SAP shares are clinging to support just days before a pivotal second-quarter earnings report, with the stock having shed more than a third of its value since the start of 2026. The software giant, which closed Monday at €136.02 after a 1.79% drop, now trades less than 4% above its 52-week low of €130.80 — a level marked at the end of June. The sell-off has erased most of the valuation premium built during the earlier AI euphoria, when the stock traded above €263 in mid-2025.
The market’s mood has soured despite a series of potentially positive developments. In early July, the European Commission closed a cartel investigation into SAP without imposing penalties, removing one regulatory overhang. Days later, the company announced the acquisition of Prior Labs, a Freiburg-based startup specializing in tabular foundation models for enterprise data, for more than €1 billion spread over four years. Neither event was enough to arrest the slide. “The market is clearly looking for proof that SAP can monetize its AI investments while defending margins,” said one analyst.
Analyst opinion on the stock is sharply divided. JPMorgan’s Toby Ogg, in a study dated July 17, maintained a “Neutral” rating with a €175 price target, arguing that overall enterprise software spending is likely to shrink over the long term as budgets shift toward cloud, observability, and cybersecurity — areas where SAP has exposure but faces stiff competition. Morningstar takes a markedly different view, assigning the stock its top five-star rating and a fair value estimate of €265, citing what it calls a wide competitive moat. Still, Morningstar warns that geopolitical risks could weigh on customer behavior in the near term.
The consensus for the second quarter, due after the U.S. market close on July 23, calls for cloud revenue of €6.26 billion, representing 22% year-over-year growth. Total revenue is expected to rise 9% to €9.85 billion, while adjusted EBIT should climb 12% to €2.88 billion. On a per-share basis, analysts project adjusted earnings of €1.75, up 16%. The cloud backlog, a key forward-looking metric, is forecast to grow between 23% and 24%, a deceleration from the 25% reported a year earlier and from the 20% expansion seen in the first quarter.
Should investors sell immediately? Or is it worth buying SAP?
A dark cloud over the sector appeared last week when IBM issued a profit warning that sent its own shares tumbling roughly 25%. The reason: customers are diverting spending from traditional software to AI infrastructure, casting doubt on the ability of legacy enterprise software vendors to capture the value of AI adoption. SAP’s upcoming conference call will likely face questions about whether its own customer base is experiencing a similar shift. Early signs are visible: SAP has reportedly slowed hiring outside of its AI unit, reallocating resources to that area.
Chart technicians see little reason for optimism in the near term. The stock is trading 22.64% below its 200-day moving average of €175.83, and the 50-day average of €144.72 — a level the shares recently slipped under — now acts as resistance. One near-term forecast from Finanzen100 warns that unless a clear bottom forms, the stock could fall into a range between €112 and €138 within four weeks. For now, the €130 mark is seen as the last concrete support before a deeper correction.
In a bid to demonstrate conviction in both its strategy and its valuation, SAP is executing a share buyback program of up to €2.6 billion, which runs through July 31. Separately, the company is pushing forward with its own AI tooling. It recently unveiled ABAP-1, a specialized language model trained on 250 million lines of its proprietary ABAP programming code. While SAP positions ABAP-1 as an explanatory assistant rather than a code generator, the model underperformed a cheaper general-purpose AI in benchmark tests — a reminder of how competitive the AI arms race has become.
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On the operational front, the company continues to deepen its cloud footprint. In the Middle East, the ALSAYER Group has launched a five-year digital transformation program called iVolution in partnership with SAP Middle East and implementation partner Proaxia, centered on S/4HANA and the Proaxia VSS solution. At the same time, AWS and Microsoft Azure are jockeying to host SAP HANA workloads, offering increasingly memory-rich instances — a sign that SAP’s infrastructure needs have become a battleground for hyperscalers.
All of this sets the stage for a defining moment on Thursday. The earnings release will need to show that SAP can sustain its cloud growth momentum — forecast at 22% in the quarter — while absorbing the cost of a €1 billion-plus AI acquisition and fending off sector-wide spending rotation. If the numbers and management’s outlook disappoint, the shares could easily test that €130 floor. If they surprise to the upside, a return toward the 50-day average is plausible. For a stock that has already lost nearly 35% of its value this year, the margin for error is thin.
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