SAP’s €2.6 Billion Buyback Fails to Lift the Stock as Cloud Growth Concerns Linger

SAP shares near 52-week low despite double-digit cloud revenue growth. A €10B buyback and AI-focused roadmap aim to restore investor confidence amid Q2 slowdown fears.

The disconnect between SAP’s operational performance and its share price has rarely been wider. While the software giant continues to churn out double-digit cloud revenue growth and boasts a swelling order book, its stock has shed roughly 28% since the start of the year, closing Friday at €144.40 — perilously close to its 52-week low of €139.12.

Investor caution is rooted in a softer outlook for the second quarter. Management has flagged a slowdown in cloud expansion, largely because one-off tailwinds that inflated the first-quarter numbers have now faded. Still, the executive team is standing by its full-year guidance. SAP continues to target an adjusted operating profit of around €12 billion for 2026, contingent on no further escalation in the Middle East conflict and a smooth completion of the planned Reltio acquisition.

The €10 billion share buyback program, running through 2027, was designed to shore up confidence. The first tranche, which wrapped up in April, saw SAP repurchase roughly €2.6 billion worth of its own shares. A second wave of up to €2.6 billion is already underway and is scheduled to conclude by the end of July. So far, however, the repurchases have done little to arrest the slide. The stock remains well below its 50-day moving average of €156.35.

Behind the scenes, institutional investors are taking a different view. Hedge funds and large asset managers have been steadily accumulating shares during the pullback. Windacre Partnership LLC more than doubled its stake to roughly 2.36 million shares. Bank of America also boosted its holdings significantly. Most striking was Thrivent Financial for Lutherans, which nearly multiplied its position a hundredfold to 421,000 shares over the past quarter.

An analyst upgrade over the weekend added a fresh layer of optimism. Wall Street Zen raised its rating on SAP from “Hold” to “Buy” on Saturday, a notable counterpoint to recent downgrades from Citi and Piper Sandler. The new rating comes as the market prepares for two pivotal events this month: the virtual annual general meeting on May 5 and the Sapphire conference in Orlando from May 11 to 13.

At the AGM, shareholders will vote on a proposed dividend of €2.50 per share, a roughly 6% increase year-on-year. If approved, the dividend will go ex-dividend on Wednesday. But the real focus is on Orlando, where CEO Christian Klein and his team are expected to lay out the product roadmap. Artificial intelligence will dominate the agenda, with management set to explain how SAP’s vast data assets can drive concrete business outcomes through AI. The Reltio acquisition, which is expected to close in the second or third quarter pending regulatory approval, is central to this strategy. Reltio’s master data management technology is designed to prepare customer data for AI applications.

On the legal front, SAP has removed a lingering overhang. The company booked roughly €400 million in special charges in the first quarter related to a settlement in its dispute with Teradata. That payment weighed on free cash flow but also resolved a significant source of uncertainty.

First-quarter cloud revenue rose 27% on a currency-adjusted basis, while the associated backlog swelled to €21.9 billion. Total revenue of €9.6 billion slightly missed analyst expectations, triggering a brief bout of selling in late April. Despite the near-term headwinds, the average analyst price target for SAP stands at roughly $288 per share. Chart watchers are eyeing the resistance zone around €170; a clean break above that level could open the path toward €200. For now, the stock’s fate hinges on whether the Sapphire conference can deliver the catalyst needed to defend the key support at €139.