SAP’s Q2 Earnings Arrive Amid a Cloud Revenue Boom and a 50% Stock Wipeout

SAP reports Q2 results with record cloud backlog; shares halved from Jan high. Market awaits cloud revenue and margin proof amid AI integration delays.

The disconnect between SAP’s operational momentum and its stock price has rarely been starker. When the German software giant reports its second-quarter results after the European close on Thursday, it will do so with a record cloud backlog in the rear-view mirror and a share price that has shed nearly half its value over the past twelve months. The market’s judgment on whether the transformation story still holds will hinge on a handful of numbers that land after 10 p.m. CEST.

Analysts expect quarterly revenue of €9.85 billion, with cloud revenue rising 22% to €6.26 billion. Adjusted earnings per share are pegged at roughly €1.75, while operating profit is forecast at €2.88 billion, implying a margin of 29.4%. The current cloud backlog — which hit €22.06 billion in the first quarter after a 22.2% increase — serves as a critical forward indicator. For the full year, SAP has guided for currency-adjusted cloud growth of 23% to 25%, translating to between €25.8 billion and €26.2 billion. Any deviation from that trajectory will be punished instantly.

That backdrop explains why the stock slipped 2.14% on Tuesday to €136.10, leaving it perilously close to the 52-week low of €130.80 set in late June. From its January high of €263.55, the decline amounts to nearly 50%. The 200-day moving average of €175.32 now sits 22.37% above the current price, confirming the severity of the medium-term downtrend. Chartists see support at €129.35 — a break below that could accelerate selling — while resistance stands at €160 and then €170.

The sell-off reflects a deeper anxiety among investors about whether SAP’s traditional license model can pivot fast enough to monetise artificial intelligence. UBS analyst Michael Briest highlighted in July that large customers are slow to integrate AI agents into complex ERP environments, delaying the revenue lift SAP had hoped for. The company counters that its proprietary data assets give it a structural edge over newcomers, and it is embedding its Joule AI assistant directly into cloud offerings. But the proof will be in the margin expansion, and that remains elusive.

On the bullish side, the demand pipeline is formidable. By the end of 2025, the total cloud order book reached a record €77.3 billion, up 30% on a constant-currency basis. The looming end of mainstream maintenance for SAP ECC in 2027 is forcing companies to migrate to S/4HANA, and a study by valantic and techconsult found that more than 60% of firms in the DACH region have already adopted S/4HANA either in the cloud or on-premise. Still, implementation challenges persist: a separate Horváth study from 2025 concluded that only 8% of S/4HANA migrations finish on schedule, with the average project running 30% over time and more than half exceeding budget.

Analyst sentiment remains constructive overall. Fourteen analysts recommend buying the stock, three are neutral, and only one advises selling. The consensus price target stands at €200, roughly 47% above the current level. JPMorgan, which rates SAP “Neutral,” has a target of €175 — some 28% higher — and flags the secular shift of IT budgets toward cloud, observability and cybersecurity as supportive, while cautioning that competitive pressure is intensifying. CLSA goes further, assigning a “Buy” rating and calling the current weakness an attractive entry point for contrarian investors, even as it slaps “Underperform” on peers such as ServiceNow and Workday.

The EU’s decision to close its antitrust investigation into SAP without a fine adds a layer of regulatory clarity, but the settlement also allows customers to extend the life of older on-premise systems, potentially slowing the shift to higher-margin cloud subscriptions. A €10 billion share buyback programme, partly executed already, could provide some floor under the stock.

Ultimately, two metrics will determine whether Thursday’s report sparks a rebound or deepens the slide: the cloud backlog growth rate and the operating margin. If cloud billings hold at the 27% pace seen in the first quarter and margins begin to tick higher, the bear case loses its footing. If adoption delays continue and the AI monetisation story remains just that — a story — the stock may test new lows before the summer is out.