SAP’s Cloud Orders Surge Past €22.9 Billion, but the Market Is Still Weighing AI Costs Against Growth
Published on 07/28/2026 at 18:12 | Redaktion boerse-global.de
SAP shares climbed sharply on Tuesday, adding 5.81% to reach €159.50, extending a rally that began after the software giant released its second-quarter results last Thursday. The move marks one of the strongest single-day gains in months, yet the stock remains roughly 9.3% below its 200-day moving average of €175.85 — a reminder that the longer-term recovery has yet to fully take hold.
The catalyst for the rebound was a quarterly report that presented investors with a clear trade-off: cloud momentum is accelerating, but the cost of building out artificial intelligence capabilities is eating into profitability. Cloud revenue jumped 24% to €6.3 billion, while the currency-adjusted current cloud backlog — a closely watched gauge of future revenue — surged 26% to €22.9 billion. That backlog figure, which Jefferies analyst Charles Brennan called a “clear highlight” that beat market expectations, underscores the strength of SAP’s cloud pipeline even as macroeconomic uncertainty weighs on corporate IT spending.
On the other side of the ledger, SAP trimmed its full-year 2026 profit guidance, citing integration costs tied to acquisitions completed in July — including the purchase of AI startup Prior Labs. The company now expects operating profit under non-IFRS to come in between €11.8 billion and €12.2 billion, down from its previous range. The second-quarter operating result under that measure rose 8% to €2.64 billion, but on a reported basis, restructuring costs pushed operating income down 11% to €2.6 billion. Free cash flow, however, climbed 27% to €3.0 billion, offering some comfort to shareholders focused on capital returns.
The mixed signals have split analyst opinion. Berenberg reaffirmed its buy recommendation on Monday but trimmed its price target from €215 to €205, citing rising cost pressure from SAP’s AI offensive despite the strong cloud dynamics. J.P. Morgan struck a more cautious tone, keeping a “neutral” rating and a €175 target, pointing to the contracting operating margin in the second quarter as a drag. UBS, Jefferies, and Deutsche Bank all maintained buy ratings, with price targets ranging from €164 to €210. At the bearish end, DZ Bank slashed its fair value estimate to €120 and held a sell rating — a view that stands far below the current share price.
Should investors sell immediately? Or is it worth buying SAP?
The tension between growth and margin is the central question for SAP investors. The company’s cloud backlog hit €22.9 billion, a 27% increase that signals customers are committing to long-term cloud contracts even as they navigate their own AI strategies. Airbus chose SAP’s “RISE with SAP” platform in late July, combining it with a sovereign cloud operating model for its business transformation. Earlier in the month, Thüringer Energie AG selected SAP software as the core platform for its digital overhaul. Those wins bolster the narrative that SAP’s cloud business is gaining traction across industries.
Yet the cost side remains a concern. The integration of Prior Labs and Dremio — another AI-focused acquisition — is weighing on margins, and JPMorgan analyst Toby Ogg described the margin development in the second quarter as a “negative surprise.” The annualized volatility of SAP shares stands at 48.55%, reflecting the market’s skittishness around the stock. If the margin pressure persists into the third quarter, the current rally could prove short-lived.
Management has signaled confidence through its capital allocation. On Monday, SAP launched the second tranche of its share buyback program, worth up to €2.6 billion — a move that investors often interpret as a vote of confidence in the company’s valuation. Separately, board member Thomas Heinrich Saueressig purchased SAP shares worth €70,392 in early July, a small but symbolic insider buy.
SAP at a turning point? This analysis reveals what investors need to know now.
For now, the market appears to be giving SAP the benefit of the doubt, betting that the cloud backlog growth will eventually translate into margin expansion once the AI integration costs subside. The next major checkpoint comes on October 21, when SAP reports third-quarter results. Until then, the margin trajectory — not the order book — will determine whether this rally has staying power or fades as a temporary bounce in a structurally challenged year.
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