SAP's €21.9 Billion Cloud Backlog and BSI Certification Can't Break the Oracle-Fueled Selloff

SAP shares tumble on Oracle's massive capex shockwave, but Q1 cloud revenue jumps 27% to €9.6B, backlog hits €21.9B, and BSI security clearance opens government market.

SAP’s stock has lost nearly 28% of its value since the start of the year and sits about 46% below its 52-week high of €266.00 — yet the German software giant’s underlying business is putting up numbers that tell a different story. A day after closing at €144.74 with a modest 1.6% gain, the shares remain trapped in a downdraft triggered not by anything SAP did, but by a capex shockwave from a US rival.

The selloff that began last week was ignited on June 10 when Oracle reported record revenue and better-than-expected earnings, only to see its stock tumble after hours on the back of a jaw-dropping capital expenditure plan: up to $95 billion by 2027. The sheer scale of the investment spooked investors across the technology sector. JPMorgan analyst Toby Ogg noted that the momentum in Oracle’s cloud applications had faltered for the first time, sending a “mildly negative signal” for SAP’s near-term prospects in enterprise software. UBS fanned the flames by downgrading a basket of European IT stocks, dragging SAP deeper into the red.

Operational strength stands in stark contrast

While the market fixates on the cost of the AI arms race, SAP’s first-quarter 2026 results showed little sign of a slowdown. Cloud revenue jumped 27%, total sales climbed to €9.6 billion, and operating profit rose 24% to €2.9 billion. More importantly, the cloud backlog — contracts signed but not yet recognized as revenue — expanded on a currency-adjusted basis to €21.9 billion, underscoring that enterprise customers are still committing to the platform.

For the full year, management has guided for cloud revenue between €25.8 billion and €26.2 billion. To bankroll its acquisition-heavy AI strategy, SAP placed a €3.5 billion bond in four tranches back in May.

A trio of deals to control the data layer

SAP has been quietly building out its capabilities through M&A. In addition to the previously announced acquisitions of Dremio, a data-lakehouse specialist, and Prior Labs, an AI lab focused on tabular data, it has also bought Reltio, a master data management provider. Dremio’s serverless architecture, built on Apache Iceberg, will let SAP Business Data Cloud users query data from SAP and third-party sources without excessive movement. Prior Labs, meanwhile, will help turn SAP into a leading AI research lab for enterprise data — with a price tag exceeding €1 billion over four years.

All three deals — Dremio targeted for the third quarter of 2026, Prior Labs for the second or third quarter, and Reltio already closed — are subject to regulatory approvals. The common thread is control of the data layer, not just embedding AI features into applications.

A security milestone that went unnoticed

On June 9, the German Federal Office for Information Security (BSI) granted SAP the right to process data classified as “VS-NfD” — the lowest secrecy level for government use. SAP is now the only provider capable of running both its own and customer applications in a VS-NfD-compliant environment, using its own data centers in Walldorf and St. Leon-Rot with strictly vetted personnel. Management views this as an intermediate step toward full BSI certification. Yet the stock barely reacted, a sign of how deeply the Oracle narrative has overshadowed domestic regulatory wins.

The next test arrives July 23

Investors will get a clearer picture of whether the operational momentum can overcome the sector headwinds when SAP publishes its half-year report on July 23. The focus will be on the cloud backlog and the cloud gross margin — two metrics that indicate whether the AI strategy is translating into paying customers. The company is also rolling out its “North Star” AI architecture, which aims to embed intelligence and governance across the platform. Meanwhile, SAP is offering its Joule AI assistant free of charge until the end of 2026, a move that suggests adoption still needs a push before it turns into meaningful revenue.

For now, the gap between what SAP is achieving and how the market is pricing it remains unusually wide. Analysts will be watching the half-year numbers to see if the cloud backlog continues to grow at the pace set in the first quarter — because at current valuation levels, the bear case fueled by Oracle’s spending pledge may be harder to justify.