SAP Stock: The Bull Case and the Bear Case Both Have Merits — Here's the Data

SAP shares trade at €139, near 52-week low, despite strong Q1 cloud revenue growth. Bernstein targets €273, citing overreaction to Oracle capex and Fed rate hike fears.

SAP’s shares are trading at roughly €139, barely three percent above their 52-week low of €135.52, after shedding nearly half their value over the past twelve months. Yet on the same street where the market sees a software stock in distress, Bernstein Research sees a near-double — slapping a €273 price target on the equity, implying a 97 percent upside from current levels. The disconnect could hardly be starker.

The immediate headwinds are external and intense. Oracle’s quarterly release on June 11 sent a chill through the European software sector when the US giant announced capital expenditure plans of $90 billion to $95 billion for fiscal 2027, far above the $68 billion consensus. The market interpreted the message as a warning: even a strong Oracle quarter could be undermined by the sheer scale of AI infrastructure spending, raising the same risk for peers like SAP. The German company’s stock lost roughly four percent that day, making it the worst performer in the DAX. Adding to the pressure, UBS subsequently downgraded European IT stocks, and the Federal Reserve added its own weight. At its June 17 meeting, the first under Chair Kevin Warsh, the Fed held rates at 3.50–3.75 percent but signalled that nine of 18 policymakers see rate hikes as possible in 2026, with inflation running at 4.2 percent and energy costs climbing due to the Iran conflict.

Technically, the stock is trapped. It is trading about 25 percent below its 200-day moving average of €186.59 and 26 percent below that same average according to the most recent data. The 50-day line sits at €148.76, reinforcing a voluminous resistance zone around €150. On the downside, the €135 support has held so far, creating a sideways channel between €135 and €155. The relative strength index stands at 38.4, technically oversold — but without a fundamental catalyst, that indicator alone rarely triggers buying.

The fundamental picture, however, tells a different story. In the first quarter of 2026, SAP’s cloud revenue climbed 27 percent year-on-year, total revenue reached €9.6 billion, and operating profit rose 24 percent to €2.9 billion. The cloud order backlog — a forward-looking gauge of future revenue — swelled to €21.9 billion. These are the numbers Bernstein is betting on. The research house reaffirmed its buy rating, arguing that the market has overreacted to sector-wide noise and is ignoring SAP’s own operating momentum. JPMorgan, in contrast, maintained a hold rating after the Oracle print and did not revise its price target.

The next major test comes on July 23, when SAP publishes its half-year report. Investors will focus on two metrics: the cloud backlog and the cloud gross margin. Both will indicate whether the company’s AI investments are translating into commercial traction or whether the cost of that push is eating into profitability, as Oracle’s capex surge has raised fears. In late May, SAP also placed a €3.5 billion euro-denominated bond with maturities of up to seven years, earmarking the proceeds for general corporate purposes and potential acquisitions. That move signals management’s confidence in its own growth trajectory even as the stock languishes near the floor. For now, the stock remains caught between macro scepticism and a fundamentally bullish thesis — a tug-of-war that only fresh numbers can resolve.