SAP’s €22.9 Billion Cloud Backlog Fuels a Rally, but the DZ Bank Sees a 120-Euro Floor

SAP shares gain for third straight session after Q2 results, cloud backlog jumps 27% to €22.9B, but profit guidance cut and overbought signals fuel analyst divide.

The software giant’s shares have strung together three consecutive sessions of gains, climbing 3.31% on Wednesday alone to trade at €162.72. The catalyst came last Thursday, when SAP released its second-quarter and first-half 2026 results, and the market has been digesting the numbers favorably ever since. Yet beneath the surface of this rally lies a sharp divide among analysts about whether the company’s cloud momentum can outweigh the margin pressure from its recent acquisitions.

The headline figures tell a clear growth story. Cloud revenue rose 24% on a currency-adjusted basis, while the cloud backlog swelled 27% to €22.9 billion. Earnings per share improved to €1.89 from €1.46 a year earlier. Total revenue climbed 9.4% to €9.88 billion. But the narrative took a twist when management trimmed its full-year operating profit guidance to a range of €11.8 billion to €12.2 billion, down from a previous ceiling of €12.3 billion. The company attributed the revision to dilution effects from its acquisitions of data platform Dremio and Freiburg-based AI startup Prior Labs.

The market’s initial reaction was cautious, but the tone shifted this week. On Monday, SAP launched the second tranche of its massive buyback program, authorizing up to €2.6 billion in share repurchases through January 2027 as part of a broader €10 billion plan. Adding to the positive sentiment, CEO Christian Klein purchased just over 2,000 shares last week at an average price of €158.49, a move widely interpreted as a vote of confidence. Fellow board member Thomas Saueressig had also bought shares worth €70,392 in early July, while major shareholder Harald Tschira expanded his voting rights stake to 4.22%.

The bull case rests on the cloud backlog’s trajectory. Jefferies analyst Charles Brennan reiterated his buy rating with a €210 price target on Tuesday, pointing to sustained growth rates. Berenberg trimmed its target from €215 to €205 but maintained its buy recommendation, emphasizing that the cloud contract pipeline offsets near-term cost concerns. The logic is straightforward: the backlog is expanding faster than revenue, providing a buffer for future earnings. New partnerships — including a broader deployment of RISE with SAP and Sovereign Cloud at Airbus, and AI solutions for insurer SIGNAL IDUNA — further strengthen the strategic narrative.

But the bears have ammunition of their own. The DZ Bank slashed its fair value estimate to €120 and kept a sell rating, arguing that the inorganic effects from Dremio and Prior Labs will weigh on operating margins more heavily than the guidance adjustment suggests. Technical indicators add to the caution: the relative strength index sits at 69.5, approaching the threshold that typically signals overbought conditions. After a week of sharp gains, a pullback or consolidation phase would not be unusual.

Despite the recent rally, the stock remains firmly in negative territory year-to-date and still trades well below its summer 2025 record high. Perhaps more tellingly, the share price continues to languish beneath its 200-day moving average — currently about 8.80% below that long-term trend line — suggesting the medium-term downtrend has yet to break.

The central question for investors is whether the structural strength of the cloud business can absorb the short-term margin drag from the acquisitions, or whether the lowered profit guidance marks the beginning of a series of disappointments. The answer may hinge on how quickly the €22.9 billion backlog converts into recognized revenue and how disciplined management proves in controlling integration costs.

The next major checkpoint arrives on October 21, when SAP reports third-quarter 2026 results. Until then, the buyback program should provide technical support, while the cloud backlog’s evolution will be the primary metric for bulls and bears alike. If the margin pressure from Dremio and Prior Labs proves temporary, the path to analyst targets in the €205-€210 range remains open. If it persists, the DZ Bank’s €120 floor may start to look less like a worst-case scenario and more like a realistic destination.