SAP’s Record Cloud Backlog Lifts Shares 9%, but AI Integration Costs Cast a Shadow Over Margin Recovery
Published on 07/26/2026 at 12:52 | Redaktion boerse-global.de
SAP shares staged their biggest single-day rally in months on Friday, surging 9.15% to €140.80 after the software giant unveiled a second-quarter cloud backlog that smashed analyst expectations. The jump pulled the stock roughly 10.4% above its recent 52-week low, yet the shares remain down 32.42% year-to-date and trade nearly 19% below their 200-day moving average of €173.78 — a stark reminder that one strong session does not erase a prolonged downtrend.
The trigger for the bounce was a single number: the current cloud backlog, which measures signed but unbilled cloud contracts, climbed 26% on a currency-adjusted basis to €22.9 billion. Cloud revenue itself rose 24% in constant currency to €6.28 billion, while total group revenue increased 9% to €9.88 billion. On the surface, those figures paint a picture of accelerating demand for SAP’s cloud services, and Jefferies analyst Charles Brennan was quick to call the backlog a record that signals “accelerating subscription momentum.” He reiterated a Buy rating with a €210 price target.
Beneath the headline growth, however, the quarter revealed a tension that now defines the investment case. Operating profit under non-IFRS measures rose just 7% to €2.74 billion — a figure that, according to dpa, narrowly missed the average analyst estimate. That margin squeeze prompted SAP to trim its full-year adjusted operating profit guidance to a range of €11.8 billion to €12.2 billion, down from the previous corridor of €11.9 billion to €12.3 billion. The EBIT growth forecast was correspondingly lowered to 13%–17% from 14%–18%.
SAP attributed the downgrade to short-term dilution from two recently completed acquisitions. On July 6, the company finalized its purchase of Dremio, a provider of data-lakehouse platforms for agentic AI applications. Eleven days later, it closed the acquisition of Prior Labs, a specialist in so-called tabular foundation models. SAP plans to invest more than €1 billion in these areas over the next four years. The deals are designed to bolster the company’s “Business AI Platform,” but their integration costs are hitting the income statement now, before the revenue benefits materialize.
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That dynamic left analysts split on Friday. JPMorgan’s Toby Ogg kept a Neutral rating and a €175 price target, describing the margin decline and the operating profit miss as the quarter’s “negative surprise.” The divergence in views — Jefferies at €210, JPMorgan at €175, with other houses such as UBS clustering around €164 — reflects genuine uncertainty about whether cloud momentum can outrun acquisition-related margin pressure over the next several quarters.
CEO Christian Klein signaled his own conviction by purchasing SAP shares worth €325,218.90 immediately after the results were released, at an average price of roughly €133.60. The insider buy follows a similar move by CFO Dominik Asam in January at €169.20 and dovetails with SAP’s €10 billion share buyback program, whose first tranche of roughly €2.6 billion covering 16.28 million shares has already been completed.
A separate regulatory development in early July removed one overhang: the European Commission closed its competition review of SAP’s policies for maintenance and support of on-premise solutions without announcing further action.
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The bull case rests on the idea that the cloud backlog — which provides revenue visibility several quarters out — will eventually translate into higher-margin revenue that more than offsets the AI investment costs. If that plays out, analysts argue, the stock could begin to close the gap to its 200-day moving average. The bear case, articulated most clearly by JPMorgan, warns that the integration of Dremio and Prior Labs is only beginning and that further margin erosion could force additional guidance cuts.
The next concrete test arrives on October 21, when SAP reports third-quarter results. By then, investors will have a clearer read on whether the margin trajectory is stabilizing or deteriorating — and whether Friday’s 9% surge was the start of a genuine recovery or a fleeting relief rally in a stock that has lost nearly a third of its value this year.
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