SAP's Cloud Engine Outpaces M&A Drag as Jefferies and Citi Turn Bullish
Published on 09/24/2026 at 04:50 | Editorial boerse-global.de
Two of Wall Street's more influential voices have turned more constructive on SAP, and the timing says as much about the market's mood as it does about the German software maker's fundamentals. Jefferies analyst Charles Brennan lifted his price target on the DAX heavyweight to EUR 220 while reaffirming a Buy rating, according to media reports. Citi followed in short order, nudging its own target up to EUR 215. The stock responded in kind, trading at EUR 185.84 on the day and posting a gain of 1.1%.
That marks a notable shift. Barely more than a month ago, more skeptical ratings had weighed visibly on the share price. The fresh targets suggest investors are once again training their attention on the company's operating recovery potential rather than its near-term costs.
The metric that matters most
For anyone trying to gauge where SAP goes next, one number towers above the rest: the Current Cloud Backlog. This contractually secured pipeline for cloud services is widely treated as the sector's most dependable leading indicator of future revenue.
In the second quarter of 2026, that backlog expanded 27% to EUR 22.9 billion. Holding that pace is the central challenge, because migrating large existing customers onto modern platforms underpins the entire medium-term growth narrative. Management is targeting currency-adjusted cloud revenue of EUR 25.8 billion to EUR 26.2 billion for 2026, with the Cloud ERP Suite doing much of the heavy lifting — its revenue climbed 27% at constant currencies in the second quarter.
Landing marquee names helps cement those recurring revenues. Lockheed Martin, for instance, is using SAP SuccessFactors to overhaul its workforce management.
Should investors sell immediately? Or is it worth buying SAP?
A summer of dealmaking — and its price tag
SAP spent the summer months bulking up its technology stack through acquisitions. On July 17, the company closed its purchase of Prior Labs, a specialist in tabular foundation models, with more than EUR 1 billion earmarked for investment in the field over four years. The takeover of digital adoption platform WalkMe, valued at roughly USD 1.5 billion in equity, is likewise complete. Add to that the acquisition of Dremio, whose technology for agentic data architectures rounds out the portfolio.
Those deals come with a bill. SAP puts the dilution effect from the Dremio and Prior Labs purchases at more than EUR 100 million. As a result, the executive board adjusted its full-year 2026 outlook for non-IFRS operating profit, now guiding to a constant-currency range of EUR 11.8 billion to EUR 12.2 billion.
Product development has continued in parallel. Since September 15, the TabPFN-3.5 Plus model has been available in the SAP AI Core service, supporting predictions within operational processes — part of a broader effort to weave advanced analytics more tightly into standard business applications.
Where the risks sit
The heaviest drag on profitability right now stems from those recent takeovers. Should integration of the platforms take longer than planned or generate additional costs, margins would come under further strain. Security spending adds another layer of expense: roughly two weeks ago, on its monthly security day, SAP published 19 security notes, including fixes for critical vulnerabilities. Such disclosures underscore just how personnel-intensive and costly it remains to protect modern cloud environments.
Technical considerations also matter for the share's trajectory. The stock closed at EUR 184.98 in German trading in the prior session, a modest daily gain of 0.5%, putting it 11% above its 200-day moving average of EUR 167.20. So long as the price holds above that line, the chart favors a continuation of the upward move. A stall in cloud backlog growth or unexpected integration costs, however, could trigger a downward revaluation.
The next concrete catalyst is the upcoming quarterly report, when management will need to demonstrate that the upper end of its cloud revenue target — EUR 26.2 billion — remains within reach. Whether the product initiatives now underway are enough to secure the annual goals inside the revised range will become clearer with those numbers.
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