SAP’s €22.9 Billion Cloud Backlog Ignites a Rally — But the Cost of Two AI Deals Is Already Biting
Published on 07/30/2026 at 03:21 | Redaktion boerse-global.de
The numbers from SAP’s second-quarter report were strong enough to jolt the stock out of a deep slump. On July 23, the shares touched a 52-week low of €127.52. Within hours, the software giant released results that sent the stock soaring 25.75% over seven trading sessions, closing at €162.22 on Wednesday. Yet beneath that headline recovery lies a tension that will define the next chapter for Europe’s most valuable technology company: a booming cloud pipeline versus the margin-diluting cost of two freshly completed acquisitions.
SAP’s cloud order backlog swelled 27% to €22.9 billion (26% in constant currency), while cloud revenue climbed 22% to €6.28 billion. Total revenue rose 9% to €9.88 billion, and IFRS earnings per share jumped from €1.46 to €1.89. Those figures alone would normally be cause for unqualified celebration. But the company also closed the purchases of US data platform Dremio and Freiburg-based AI startup Prior Labs on July 17, and the integration costs are already visible in the outlook.
Management trimmed its full-year guidance for adjusted non-IFRS operating profit to a range of €11.8 billion to €12.2 billion, down from the previous €11.9 billion to €12.3 billion. The company attributes the revision to dilution effects from the two takeovers. For investors, the question is whether the accelerating cloud momentum can more than offset the near-term drag from SAP’s AI offensive.
Should investors sell immediately? Or is it worth buying SAP?
The bull case rests on the sheer breadth of the growth figures. Jefferies upgraded the stock from “Hold” to “Buy” on July 28 with a €210 price target, while Goldman Sachs reaffirmed its “Buy” rating on July 27, trimming its target only slightly from €225 to €215. Berenberg, though reducing its target from €215 to €205, also kept a buy recommendation, citing the cloud contract backlog as a powerful counterweight to cost pressures. CEO Christian Klein put his own money behind that optimism, purchasing SAP shares worth €325,218.90 on the open market last week. A separate insider buy from board member Thomas Saueressig in early July, along with major shareholder Harald Tschira raising his voting stake to 4.22%, adds to the picture of internal conviction.
The bearish camp, however, is far from silent. The DZ Bank cut its price target from €130 to €120 on July 24 and maintained a “Sell” rating — a level more than 25% below the current share price. Evercore ISI lowered its target from €175 to €160 the same day with a neutral “In-Line” stance. JPMorgan held its “Neutral” rating and €175 target on July 27, while Barclays trimmed its dollar-denominated target from $255 to $242 but kept an “Overweight” rating. The wide dispersion in analyst views underscores the uncertainty: the rally may have been sharp, but it has not convinced everyone that the fundamentals justify the move.
Technically, the stock still has ground to make up. Despite the surge, it trades 7.55% below its 200-day moving average — a key long-term trend indicator — and the annualized 30-day volatility of roughly 48% points to a nervous, nonlinear recovery. The secondary source notes an 8.80% gap to that same average, a slight discrepancy that reflects the timing of the data but confirms the same structural weakness.
The next concrete test arrives on October 21, when SAP reports third-quarter results. Until then, the trajectory will hinge on whether the cloud backlog converts into profitable revenue at a pace that absorbs the integration costs of Dremio and Prior Labs. The €2.6 billion second tranche of SAP’s buyback program, which runs through January 2027, provides a floor of support, but it cannot mask the core tension: the same AI bets that are driving the cloud pipeline are also compressing margins in the near term. If the cost side stays disciplined, the path toward the €205–€215 targets from Jefferies, Goldman, and Berenberg remains open. If integration expenses run hotter than expected, the DZ Bank’s €120 target may start to look less like an outlier and more like a warning.
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