SAP’s €10 Billion Buyback and Cloud Surge Face a Test in May

SAP's cloud business beats estimates with €5.96B revenue, but shares fall 27% YTD. A €10B buyback, €2.50 dividend, and Sapphire conference in May could define the stock's trajectory.

The software giant from Walldorf is navigating a curious disconnect. Its cloud business is firing on all cylinders, yet the share price has been battered by a 27% slide since the start of the year. With a dividend payout, a board succession, and a major product conference all looming in May, investors are bracing for a month that could define the stock’s trajectory.

Cloud Momentum Beats Estimates

SAP’s cloud division delivered a standout performance in the first quarter of 2026. Revenue from the segment reached €5.96 billion on a currency-adjusted basis, a 27% increase that edged past analyst expectations. Total group revenue climbed to €9.56 billion, matching consensus forecasts. The operating result rose 17%, while earnings per share came in at €1.65.

Not everything was rosy. Free cash flow slipped 9% to roughly €3.2 billion, weighed down by a one-off charge of around €400 million tied to a settlement in the Teradata legal dispute. The company also completed the first tranche of its buyback program in early April, having repurchased shares worth €2.6 billion.

A €10 Billion Buyback and a €2.50 Dividend

The broader buyback plan remains in place, with SAP targeting up to €10 billion in share repurchases by the end of 2027. That program will be a key talking point at the virtual annual general meeting on May 5, where the board is proposing a dividend of €2.50 per share. Shareholders will also vote on a governance change: René Obermann is slated to take over as chairman of the supervisory board next year.

The stock currently trades around €147, having nudged up from its 52-week low of €139 but still deep in negative territory. A technical recovery would require clearing the 50-day moving average near €158, a level that has so far proved elusive.

Sapphire Conference and Analyst Divergence

Immediately after the AGM, attention shifts to the Sapphire conference in Orlando in mid-May. Analysts are eager for details on SAP’s product roadmap, particularly around artificial intelligence and cloud expansion. The company has already flagged that internal AI tools have boosted developer productivity by roughly 30%, and it is targeting annual cost savings of €2 billion by the end of 2028.

The analyst community remains split. Goldman Sachs rates the stock a “Buy” with a €230 price target, while Barclays is “Overweight” at €220. At the other end of the spectrum, DZ Bank issues a “Sell” rating with a fair value of just €130. Deutsche Bank Research described the first-quarter results as better than feared, offering some reassurance after the steep sell-off.

A Cautious Outlook

Management has kept its full-year guidance intact but struck a more cautious tone on revenue growth, now expecting a similar pace to last year rather than an acceleration. The company’s ability to hit its targets hinges in part on an easing of tensions in the Middle East, a geopolitical wildcard that adds another layer of uncertainty.

For now, SAP’s operational strength is undeniable, but the market wants proof that the cloud story can translate into sustained share price recovery. May’s double-header of the AGM and Sapphire will provide the next major clues.