SAP’s AI Shopping Spree Clouds the Profit Picture Even as Cloud Orders Hit €22.9 Billion
Published on 07/30/2026 at 10:51 | Redaktion boerse-global.de
The tension at SAP right now is as clear as a profit warning can make it: the cloud business is booming, but the bill for two artificial-intelligence acquisitions is coming due faster than expected. On July 23, the German software giant reported second-quarter 2026 results that sent the stock into a consolidation phase, with shares slipping 1.39% to €159.96 on Thursday. The cloud revenue climbed 22% to €6.28 billion, while the currency-adjusted cloud backlog surged 26% to €22.9 billion — a figure that underscores sustained customer appetite for SAP’s platform. Yet the company simultaneously trimmed its full-year guidance for adjusted operating profit (non-IFRS) to a range of €11.8 billion to €12.2 billion, down from a prior ceiling of €12.3 billion. The culprit: dilution from integrating Dremio and Prior Labs, two AI startups whose acquisitions were formally closed on July 17.
The market’s reaction has been measured but cautious. The stock now trades 8.63% below its 200-day moving average of €175.08, a technical signal that the medium-term trend has lost momentum. From its 52-week low of €127.52 on July 23, the shares have bounced 25.44%, but they remain 38.14% below last year’s record high of €258.60. That wide gap encapsulates the debate now gripping investors: is this a temporary integration headache, or the start of structurally lower margins?
Insider buying and a €2.6 billion buyback signal confidence
Against that uncertain backdrop, SAP’s management has been putting money where its mouth is. CEO Christian Klein purchased 2,052 shares on July 24 at an average price of €158.49, for a total outlay of roughly €325,219 — a vote of confidence that analysts have noted. The company also launched the second tranche of its €10 billion share buyback program on July 27, planning to repurchase up to €2.6 billion in shares through January 2027. The message to the capital markets is clear: the board sees current valuations as attractive.
Should investors sell immediately? Or is it worth buying SAP?
New strategic partnerships add further texture. SAP announced an innovation pact with insurer SIGNAL IDUNA to develop AI solutions for the insurance sector using the SAP Business AI Platform. Separately, aerospace giant Airbus is expanding its use of “RISE with SAP” and the Sovereign Cloud to transform core business processes. Such marquee customers bolster the narrative that SAP’s AI-driven cloud strategy is gaining traction, even if the near-term cost of that strategy is weighing on profitability.
Analyst views split between cloud momentum and margin risk
The analyst community remains divided. Goldman Sachs lowered its price target from €230 to €215 on July 27 but kept a “Buy” rating, citing the robust cloud backlog and product pipeline. Jefferies’ Charles Brennan reaffirmed a “Buy” with a €210 target, praising SAP’s strategic maturity in AI transformation. UBS and Berenberg also maintained buy recommendations after the numbers.
On the more cautious side, Barclays cut its target from €255 to €220 on July 28 while keeping an “Overweight” rating, explicitly flagging margin risks from the recent acquisitions. JPMorgan’s Toby Ogg held at “Neutral” with a €175 target, warning that if AI investments don’t translate quickly into revenue growth, margins could face sustained pressure. The DZ Bank went further, reiterating a sell recommendation after reviewing the quarterly report.
The key question: how fast can AI costs turn into profits?
SAP at a turning point? This analysis reveals what investors need to know now.
The central metric to watch is the pace at which SAP converts the costs of its AI integration into profitable growth. The €22.9 billion cloud backlog provides a reliable revenue foundation, but the lowered profit guidance shows that growth is currently being bought at a higher price than planned. If margins recover in coming quarters as Dremio and Prior Labs are fully absorbed, the bull case — supported by Goldman Sachs and Jefferies targets in the €210-€215 range — could gain traction. If integration costs linger, JPMorgan’s more conservative €175 target may become the relevant benchmark.
The next concrete test comes on October 22, when SAP reports third-quarter 2026 results. By then, investors will have a clearer sense of whether the profit warning was a one-off adjustment or the beginning of a longer margin squeeze. For now, the stock sits in a waiting pattern, caught between a booming cloud business and the price of buying into the AI future.
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