SAP’s Military Cloud Win Fails to Lift a Stock Trapped Near Its Lows

SAP secures US DoD security clearance for cloud products, cloud revenue up 19%, but shares trade 46% below July 2025 high, near €135 support.

SAP has secured a coveted security clearance from the US Department of Defense and is on track to double-digit cloud revenue growth, yet its shares remain mired near 52-week lows. The stock, trading at around €142, has shed roughly 30% of its value since January and sits about 46% below the high reached in July 2025. The disconnect between operational milestones and market performance is stark.

The company’s cloud business continued to fire on all cylinders in the first quarter. Revenue from the segment jumped 19% year-on-year to €5.96 billion, or 27% on a currency-adjusted basis. The cloud ERP suite led the charge with a 30% constant-currency increase, while the cloud backlog — a key forward-looking indicator — swelled to €21.9 billion, up 20%. Operating profit improved 17% to roughly €2.9 billion. Management has guided for full-year cloud revenue of €25.8 billion to €26.2 billion, a target that already includes the consolidation of recently acquired master-data management specialist Reltio.

SAP is also leaning on its €10 billion share buyback program, which runs through 2027. By early April, it had repurchased about 16.3 million shares at an average price of €161.16, spending around €2.6 billion. The Reltio deal, completed in May, is intended to bolster the Business Data Cloud and support the company’s push into AI-powered enterprise applications.

On the strategic front, SAP’s US subsidiary NS2 received a provisional authorisation from the Defense Information Systems Agency (DISA) for key cloud products, including the S/4HANA Cloud Private Edition and the Business Technology Platform. These will now run within the Pentagon’s secure environment under the FedRAMP+ IL5 standard, which protects unclassified but mission-critical data. The certification unlocks access to the lucrative US military IT modernisation market for the first time. Separately, SAP designated Capgemini as its first official “SAP Sovereign Cloud Partner,” a status initially covering Germany, France, the UK and the Netherlands, aimed at helping government clients migrate to the cloud while retaining full data control.

Despite these achievements, the share price remains under heavy pressure. One major drag has been Oracle’s eye-watering AI infrastructure spending plans, which sparked sector-wide margin concerns. JPMorgan analysts, who maintain a “Neutral” rating on SAP, have also flagged a slowdown in global cloud growth. Technically, the picture is equally bleak: the stock trades below all three key moving averages (50-day at €149, 100-day, and 200-day at €187), while the relative strength index sits at 40.6 — firmly in weak territory but not yet oversold. The 52-week low of €135.52 is just over 5% away from current levels.

SAP will now look to a series of near-term catalysts to change the narrative. In June, the company is rolling out 13 new AI assistants for HR management, designed to automate routine tasks and test whether its costly AI strategy can be monetised. The real test, however, comes on July 23, 2026, when second-quarter results are due. Management has already signalled that cloud growth will decelerate from Q1 due to the absence of one-off effects. Investors will be watching closely to see whether the Pentagon clearance and other strategic wins have started to fill the cloud order book — and whether the stock can hold the €135 support level or break lower.