SAP’s Cloud Backlog Surges to €22.9 Billion, but Acquisition Costs Force a Slight Profit Guidance Trim

SAP shares touched €127.52 low as Q2 cloud backlog hit €22.9B, but 2026 profit forecast trimmed. Technicals near oversold, analyst targets above €200.

SAP delivered a mixed picture to investors on Thursday, with its stock touching a fresh 52-week low of €127.52 during the session before the software giant released quarterly results after the bell that showed cloud growth accelerating faster than anticipated. The shares closed at €128.76, just 0.97% above that intraday floor, as the market digested a report that combined a record cloud backlog with a modestly lowered profit forecast for 2026.

The cloud order backlog — a key forward-looking metric — climbed 26% on a currency-adjusted basis to €22.9 billion, up from €21.9 billion in the first quarter. CEO Christian Klein attributed the momentum to the company’s “Autonomous Enterprise” strategy, noting that more than 90% of the 50 largest deals in the quarter included an artificial intelligence component or the SAP Business Data Cloud. Cloud revenue rose 24% in constant currency to roughly €6.3 billion, while the traditional license business slumped 32% as SAP continues its aggressive shift to subscription-based offerings. Total group revenue increased 11% on an adjusted basis to €9.88 billion.

The upbeat cloud numbers were tempered by a slight downward revision to the 2026 adjusted operating profit target. SAP now expects the figure to land between €11.8 billion and €12.2 billion, compared with the prior range of €11.9 billion to €12.3 billion. CFO Dominik Asam explained that the recently completed acquisitions of Dremio and Prior Labs, which together cost more than €100 million to integrate, are temporarily diluting earnings. He defended the purchases as necessary to strengthen SAP’s position in business AI.

Adjusted operating profit for the second quarter came in at €2.74 billion, up 9% year-on-year but slightly below initial market expectations — a factor behind the intraday pressure on the stock. The shares have now lost roughly 38% since the start of the year, making SAP one of the weaker performers in the software sector. The zone around €129 has emerged as a critical support level, tested multiple times during Thursday’s session.

Technical indicators offer some hope for a reversal. The relative strength index stood at 35.4 to 36.2, depending on the calculation, edging toward oversold territory that historically has preceded short-term bounces. The average analyst price target remains well above €200, suggesting the sell-off may have overshot fundamentals. A sustained move above the 50-day moving average near €144.10 would signal a potential trend change.

Investor attention now shifts to how quickly SAP can convert its swelling cloud and AI revenue into free cash flow. The company’s target of roughly €10 billion in free cash flow remains a key benchmark. The ongoing €10 billion share buyback program could provide additional support if the cloud growth narrative holds.

Risks remain, however. Geopolitical uncertainty, particularly the Iran conflict driving up energy costs, is weighing on SAP’s European industrial customer base. Internal turbulence — the company has restructured its top management twice in 2026 — has created unease in sales and product development. Analysts also warn that enterprise customers may be shifting IT budgets toward AI hardware at the expense of software, a trend that hurt rival IBM recently.

The immediate focus is on whether SAP can defend the €127.52 level. A decisive break below that mark would leave the stock without nearby support and could invite short selling. Conversely, holding above it — combined with confirmation of the 2026 cloud revenue forecast of €25.8 billion to €26.2 billion — could lay the groundwork for a stabilization. The next catalyst comes Friday, when analysts update their models, with particular attention on any adjustments to free cash flow estimates and the impact of the recent EU antitrust settlement on cloud migration timelines.