SAP's €3.5bn Bond Backs AI Buying Spree as Cloud Growth Fails to Lift Stalled Shares

SAP raises €3.5bn in bonds for AI acquisitions; cloud backlog hits €21.9bn. Yet stock falls below key moving average amid overbought RSI and EU probe threat.

Christian Klein took the stage in Paris yesterday with a story of transformation — €3.5bn in freshly raised debt, three acquisitions in three months, and a cloud backlog swelling to €21.9bn. Yet the stock that had fallen nearly 23% since January continued to struggle, slipping back below a key technical level even as the CEO outlined his vision for an AI-driven future.

The German software giant is spending heavily to build out its artificial intelligence infrastructure. On 7 May it closed the purchase of Reltio, a master data management specialist that helps clients clean up data from both SAP and non-SAP systems for use in AI applications. Two more deals followed: Dremio, which brings real-time analytics into the SAP Business Data Cloud, and Prior Labs, a bet on AI models for structured data. SAP plans to invest more than €1bn over four years to build an in-house AI lab focused on structured data.

To fund the shopping spree, SAP tapped the bond market in late May, placing a €3.5bn note in four tranches with maturities ranging from two to seven years. The proceeds are earmarked for general corporate purposes, including refinancing the acquisitions. The balance sheet is strong enough to absorb the debt: liquid assets stood at just under €9.6bn at the end of the first quarter, while a separate share buyback programme of up to €10bn is scheduled to run through 2027.

Operationally, SAP continues to deliver. The current cloud backlog hit €21.9bn in the first quarter, a 25% increase at constant currencies. Cloud revenues rose 19% and cloud ERP suite sales jumped 23%. For the full year, management expects currency-adjusted cloud revenue between €25.8bn and €26.2bn, alongside free cash flow of roughly €10bn. But those headline numbers have done little to prop up the stock, which last changed hands at €155.84 — more than 40% below its 52-week high of €271.60.

A separate overhang is the European Commission's probe into whether SAP has unfairly restricted third-party maintenance providers. If found in breach, the company could face a fine of up to 10% of global annual revenue. SAP has offered commitments to give customers greater freedom in choosing maintenance vendors, and says it does not expect a material financial impact.

The share's technical picture is equally unsettled. After touching a 52-week low of €135.52 in mid-May, the stock rallied as much as 18% to briefly test the 100-day moving average near €162.24. That line has since become a stubborn resistance: the stock fell 2.71% on the day and now sits at €155.84, back below the 100-day MA. The relative strength index had climbed to 75.8 over 14 days — deep in overbought territory — suggesting the short-term momentum is exhausted. The 50-day moving average at €148.67 has already been reclaimed, but the 200-day line at €190.34 remains almost 16% above the current price. A decisive break below €162 could trigger a fresh slide towards the May low, while a sustained recovery above the 100-day average would shift attention to the next hurdle at the 50-day line.

All eyes now turn to 23 July, when SAP reports second-quarter results. The numbers will show whether the cloud revenue trajectory is accelerating and whether the company’s new pricing models are gaining traction. For a stock caught between operational strength and technical fragility, the earnings call may provide the catalyst investors are waiting for.