SAP’s Cloud Engine Hummed in Q2, but the Cost of Two Acquisitions Is Already Pinching Margins
Published on 07/24/2026 at 14:12 | Redaktion boerse-global.de
The German software giant’s shares staged a sharp recovery on Friday, climbing 4.62 percent to €135.48 in Frankfurt, after touching a fresh 52-week low of €127.52 just a day earlier. The rebound was fueled by second-quarter results that showed surprisingly strong demand for cloud services, even as the company simultaneously trimmed its full-year profit forecast. The stock later extended gains to €136.64, representing a 5.51 percent jump from Thursday’s close of €129.50.
The whipsaw action reflects a market wrestling with two competing narratives. On one hand, SAP’s cloud business is firing on all cylinders. The current cloud backlog — a key forward-looking metric — rose 26 percent on a currency-adjusted basis to €22.9 billion, signaling robust customer commitment to the company’s cloud and AI platforms. Cloud ERP Suite revenue climbed 27 percent, also on a constant-currency basis, as existing clients continued migrating to the S/4HANA platform.
On the other hand, the cost of that growth is becoming harder to ignore. SAP lowered its 2026 operating profit target to a range of €11.8 billion to €12.2 billion, down from the previous band of €11.9 billion to €12.3 billion. Management attributed the reduction to dilution from two recently completed acquisitions: data platform specialist Dremio and AI startup Prior Labs. Chief Financial Officer Dominik Asam acknowledged that both units are expected to generate losses in the second half of the year.
The tension between accelerating cloud adoption and margin compression is now the central debate for investors. The stock has lost 44.42 percent over the past twelve months, and even after Friday’s bounce, it remains 22.03 percent below its 200-day moving average of €173.75. Year-to-date, the shares are down roughly 35 percent.
Should investors sell immediately? Or is it worth buying SAP?
AI as the X-Factor
Chief Executive Christian Klein is betting that artificial intelligence will tip the scales. He noted that AI products and the SAP Business Data Cloud were present in over 90 percent of the company’s 50 largest deals during the quarter. Internally, Klein has pointed to productivity gains of up to 30 percent from AI-assisted software development, arguing that such efficiencies could eventually flow through to margins.
The company also cited market research suggesting that enterprises are already seeing an average 21 percent return on their AI investments — a data point SAP is using to encourage further customer spending on its Business AI Platform. For bulls, the combination of a 26 percent cloud backlog expansion and a relative valuation (the stock trades at roughly 19 times 2026 earnings) makes the current price look like an entry point. The relative strength index of 46.0 suggests the stock is not yet overbought.
The Bear Case: Technical Damage and Cost Pressure
Skeptics, including analysts at JPMorgan, view the margin development in the second quarter as a negative surprise. The profit guidance cut, they argue, shows that growth is being bought at a price. If global economic conditions soften further and dampen corporate software investment, the recovery could prove short-lived.
Technically, the stock remains in a downtrend. Friday’s gain did little to alter the fact that the shares are still 34.42 percent lower since the start of the year. The 50-day moving average at €143.91 represents the next key resistance level. A sustained close above that mark could begin to break the long-term bearish pattern, while a slide back toward Thursday’s low of €127.52 would open the door to further downside.
SAP at a turning point? This analysis reveals what investors need to know now.
What to Watch Next
Investors will be scrutinizing the integration of Dremio and Prior Labs in the coming months. The key question is whether the profit guidance cut is a one-time acquisition effect or a signal of deeper margin weakness. SAP is scheduled to report third-quarter results on October 21, 2026, and the intervening weeks will be critical for determining market sentiment.
Despite the near-term headwinds, KeyBanc recently reiterated a buy rating on the stock with a price target of €235, suggesting that the long-term thesis — cloud migration plus AI monetization — remains intact for those willing to look past the current turbulence.
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