SAP's Buyback Machine and AI Push Collide With Analyst Caution After 42% Rebound

SAP shares jump 42% on buybacks and AI push, but analysts trim targets amid mixed outlook for 2026 growth.

The software giant's shares have staged a remarkable recovery over the past month, yet the rally has exposed a widening gap between bullish operational momentum and the more measured tone coming from the analyst community.

SAP's stock has surged roughly 42 percent over the last 30 trading days, a sharp rebound that has brought the shares to 185.46 euros. The move off the lows has been driven by a combination of sustained buyback activity, accelerating cloud revenue, and a strategic pivot toward artificial intelligence that management is backing with serious capital.

Buyback Program Marches On

The company has continued to execute its share repurchase program with mechanical consistency. Between August 3 and 7, SAP acquired approximately 2.9 million of its own shares at an average price of 169.72 euros. The pace barely slowed in the following week: from August 10 to 14, the company purchased another 50,000 shares, 10,000 per trading day, at an average price of 179.35 euros.

That brings the cumulative total in the current program to 5,128,529 shares. The buyback, which has an overall volume of up to 10 billion euros and runs through the end of 2027, remains a cornerstone of the company's capital return strategy. The steady accumulation comes at a moment when SAP is simultaneously expanding its AI ambitions.

AI Investments Take Center Stage

In mid-July, SAP completed the acquisition of Freiburg-based AI specialist Prior Labs. The company is set to become the central building block for so-called tabular foundation models — AI systems specifically designed for structured table data. SAP plans to invest more than one billion euros in this initiative over the next four years, a clear signal of strategic priority.

The buybacks and acquisitions rest on a solid operational foundation. In the second quarter, cloud revenue grew 22 percent, or 24 percent on a currency-adjusted basis. The Cloud ERP Suite advanced 25 percent, or 27 percent currency-adjusted. The current cloud backlog climbed to 22.9 billion euros, up 27 percent year over year.

For the full year, SAP expects cloud revenue between 25.8 and 26.2 billion euros, implying currency-adjusted growth of 23 to 25 percent. The company is targeting non-IFRS operating profit of 11.8 to 12.2 billion euros, representing currency-adjusted growth of 13 to 17 percent.

There are, however, some headwinds. The acquisitions of Dremio and Prior Labs are weighing on results by more than 100 million euros. Overall revenue growth for 2026 is likely to land at roughly the same level as this year's 10.6 percent, with acceleration only expected in 2027.

Analysts Split on Direction

The recent rally has produced a notably divided analyst community. Berenberg has trimmed its price target for SAP from 215 to 205 euros, while maintaining a "Buy" rating. The reduction appears to be a calibration of expectations rather than a fundamental shift in sentiment.

Barclays made a similar move in late July, cutting its target from 255 to 220 euros while confirming an "Overweight" stance. The bank cited short-term uncertainties around cost development — a point that aligns with the margin-dilutive effect of the recent acquisitions.

The Erste Group Bank, meanwhile, has gone the other way, raising its earnings estimate for SAP for the current year. Two houses, two directions — and on the same day.

The dispersion of price targets tells its own story. The range stretches from 131.30 to 304.50 euros, a gap that underscores just how differently analysts view SAP's trajectory from here.

Technical Indicators Flash Caution

The sharp ascent has left visible marks on the technical indicators. The Relative Strength Index stands at 71.1 points, signaling an overbought condition. Annual volatility sits at roughly 45 percent, well above calmer market phases.

The stock remains 11 percent lower year-to-date and trails by 20 percent over the trailing twelve months. The 52-week high of 242.00 euros, reached in October of last year, still lies 23 percent above the current price.

On the regulatory front, there was some relief in July when the European Commission closed its review of maintenance and support guidelines for on-premise solutions — a development SAP explicitly welcomed.

The next significant milestone for investors arrives on October 21, when SAP reports its third-quarter financial results. Until then, the debate over the appropriate valuation is likely to persist, fueled by continued buybacks, divergent analyst opinions, and elevated volatility.