SAP Shares Face Growth Scrutiny Amid Strong Fundamentals

SAP shares fall as cloud backlog growth slightly misses expectations, overshadowing robust 2025 profits and cash flow. Analysts remain constructive ahead of a critical April report.

Despite delivering robust operational figures, SAP's stock continues to trade under pressure. The market's concern is not centered on profitability but on a specific metric that often sets the tone for cloud-centric narratives: the growth of the cloud backlog. The upcoming quarterly report in April will be a critical test of whether the software giant can dispel doubts about its growth momentum.

Market Skepticism Overshadows Solid Earnings

Since the annual results released on January 29, SAP's share price has faced headwinds. This reaction was triggered by a single detail that resonated more powerfully with investors than the otherwise solid performance: the cloud backlog growth for the fourth quarter of 2025 came in at 25% (at constant currencies), slightly below the anticipated figure of approximately 26%. This narrow gap proved sufficient to recalibrate market expectations.

The underlying operational story was decidedly positive. For the full year 2025, SAP reported a significant increase in its non-IFRS operating profit to €10.42 billion and a free cash flow of €8.24 billion. Nonetheless, the market focused on the signal that the company's exceptional cloud momentum from 2025 might be entering a phase of normalization.

This skepticism is reflected in the share price. Closing at €173.72 on Friday, the equity trades well below its 52-week high of €271.60 and also under its 50-day moving average of €184.60.

Analyst Targets Adjusted, But Outlook Stays Constructive

In response to the results, several analysts revised their price targets downward while maintaining their positive fundamental ratings. UBS reduced its target from €255 to €205 but reiterated its "Buy" recommendation. The firm cited a broader "AI displacement stress test" within the European software sector, noting that SAP is relatively well-protected because its solutions are deeply embedded in complex enterprise processes.

BMO Capital Markets also adjusted its 12-month target to $245 from $320, reaffirming an "Outperform" rating. The bank explicitly pointed to the backlog growth falling short of the 26% level management had indicated as achievable. Consequently, BMO revised its assumption for FY26 cloud growth to 24% (constant currency) but remains constructive on SAP's ongoing ERP-to-cloud migration journey.

Capital Returns and the Upcoming April Catalyst

Alongside the growth debate, SAP is making clear moves to return capital to shareholders. The company has proposed a dividend of €2.50 per share for 2025, with an ex-date of May 6 and payment on May 8. Furthermore, a new two-year share buyback program of up to €10 billion has been initiated.

Operationally, SAP continues to showcase its cloud transformation, highlighted by customer references such as the migration of FC Bayern München to "RISE with SAP." The company has also announced organizational changes, including the appointment of Thomas Saueressig to the role of Chief Customer Officer.

The next significant test is imminent. SAP is scheduled to release its next quarterly report on April 23, 2026 (22:05 CET). All eyes will be on the cloud metrics and order backlog, watching to see if the company can use concrete data to lift the currently cautious expectations.