SAP's €2.6 Billion Buyback and Regulatory Reprieve Put the Spotlight Back on Cloud Margins

SAP's cartel probe ends, but trimmed profit outlook and 38% stock drop keep investors cautious despite buybacks and cloud growth.

The German cartel office's decision to drop its preliminary inquiry into SAP's data-access practices removes a regulatory cloud that has hovered over the software giant for months. But for investors, the relief is only part of a more complex picture: the company is simultaneously navigating a trimmed profit forecast, a fresh wave of share buybacks, and a stock that remains deep in the red from its highs.

Shares closed Friday at €159.40, up 1.65 percent on the day, extending a 30-session run that has added 13.45 percent. The recovery follows a bruising stretch that saw the stock touch a 52-week low of €127.52 on July 23, from which it has since climbed roughly 11.5 percent. Even with that bounce, the equity still sits about 38 percent below its record peak of €258.60 set in late July last year, and remains down significantly year-to-date.

The Cartel Case That Went Quiet

The cartel office had been examining whether SAP impeded rival Celonis' access to data in the process-mining arena. Its decision not to open formal proceedings effectively clears SAP of those specific allegations, though the broader legal picture is far from settled. US competition cases continue in San Francisco, and SAP has countersued Celonis over alleged patent infringement — a reminder that the transatlantic regulatory saga has multiple chapters left to play out.

Cloud Momentum Meets a Softer Outlook

The recent share-price recovery also draws on the quarterly figures SAP delivered on July 23. Group revenue rose 9 percent to €9.88 billion, with the cloud business expanding 22 percent to €6.22 billion. The current cloud backlog — contracted future cloud revenue — jumped 27 percent to €22.9 billion, offering a window into coming quarters. IFRS earnings per share advanced from €1.44 to €1.88.

Yet the headline growth masks a less flattering adjustment. SAP has trimmed its 2026 guidance for adjusted operating profit growth to 13–17 percent, down from the previous 14–18 percent range. Management attributes the revision to dilution from recent acquisitions, notably the completed takeovers of data-lakehouse specialist Dremio and Prior Labs, both aimed at strengthening the company's AI and data capabilities but weighing near-term margins. The cloud unit's growth rate is also reported at 24 percent in some tallies, with AI components now embedded in over 90 percent of the largest contracts.

A Buyback, Insider Buying, and a Growing Anchor Shareholder

On July 27, SAP kicked off the second tranche of its 2026 buyback program, authorizing up to €2.6 billion in repurchases. The overall program runs to €10 billion through the end of 2027 — a signal management sees value in its own equity. Reinforcing that view, a dozen executives purchased shares between July 17 and 24, totaling roughly €3.22 million.

The shareholder register has also shifted. Harald Tschira, through voting agreements with Udo Tschira, has consolidated his stake from 0.57 percent to 4.22 percent, as disclosed in a mandatory notification. Long-time shareholders consolidating influence is often read as a vote of confidence in the company's trajectory.

Analysts Split on Valuation

The post-earnings reaction from the sell side has been unusually divided. Jefferies reaffirmed its buy rating with a €210 price target on July 28, citing the cloud backlog. UBS moved in the opposite direction, slashing its target from €205 to €164 on July 27 while keeping a "Buy" stance. Other houses have staked out positions between €175 and €215, with ratings ranging from "Neutral" to "Sell" — a dispersion that underscores how uncertain the earnings outlook has become.

The Technical Picture: Two Levels That Matter

Chart watchers see the immediate direction hinging on a couple of markers. The stock is currently trading about 8.5 percent above its 50-day moving average of €144.44 and has recovered 22.9 percent from its low. The relative strength index at 62.3 suggests the rally has room to run before becoming overbought. However, the 200-day average sits at €174.66, roughly 10 percent above the current price — a level that could act as resistance. A confirmed trend reversal, in the eyes of technical analysts, would require a move back above €175.

Support is seen around €153. A break below that could open the door to a retest of the €127.52 low. With annualized volatility near 49 percent, swings in either direction could be sharp.

AI Partnerships and the Path Forward

Operationally, SAP is pressing ahead. On July 28, the company launched a strategic AI innovation partnership with insurer SIGNAL IDUNA aimed at optimizing insurance processes — the latest in a series of moves, alongside the Dremio and Prior Labs acquisitions, designed to cement its position in business AI. Whether that technological push can translate into margin recovery will likely determine if the lowered profit guidance proves temporary or the start of a longer squeeze. The market's next test comes from third-quarter order intake in the AI segment and any further developments in the data-access dispute.