SAP's Buyback Streak and Cloud Backlog Take Center Stage Before October 21 Print

SAP repurchased 50,000 shares on XETRA from Sept 28 to Oct 2; BMO raised its target to USD 235, UBS kept Neutral ahead of Q3 results on Oct 21.

SAP shares are heading into the third-quarter reporting season with a fresh analyst endorsement in hand and a steadily shrinking share count behind them. The Walldorf software maker has been busy on the capital allocation front, buying back 50,000 of its own shares on XETRA between September 28 and October 2, according to a mandatory disclosure. That brought the cumulative volume under the current program to 8,945,886 shares as of October 2 — a figure that itself built on an earlier tranche of 590,000 shares repurchased between September 21 and 25, which had lifted the running total to 8,895,886 at that point.

The steady stream of buybacks has helped underpin the stock while investors wait for harder evidence on the business itself. On Thursday, the shares added 0.9% in XETRA trading to reach EUR 188.94, later settling around EUR 190.44 as broader market conditions turned more supportive — a firmer lead index, retreating bond yields and softer commodity prices all lent a hand.

BMO Turns More Constructive

The most tangible vote of confidence came on October 6, when BMO Capital raised its price target on the US-listed stock from USD 177 to USD 235 while keeping an "Outperform" rating. The brokerage pointed to progress in the core business, citing more constructive feedback on Joule, SAP's in-house AI assistant, and the ongoing migration of the customer base to the cloud. On that basis, BMO sees modest upside potential for cloud and software revenue.

That call lands amid a dense stretch of product activity. At the SAP Connect customer conference, management under CEO Christian Klein unveiled tools including Joule Work and the SAP Business AI Platform for the autonomous enterprise. Novartis, Nestlé, Morgan Foods and PwC are already weaving these intelligent functions into their operations. New HR assistants were also presented, alongside partnerships with Moody's and ORO Labs and fresh payment services such as SAP Pay. Joule Work is slated for delivery as soon as October.

The Metric That Matters Most

For all the product fanfare, the market's real yardstick remains the Current Cloud Backlog — the contracted order book set to convert into cloud revenue over the next twelve months. For software vendors, this measure is widely regarded as the most reliable gauge of future earnings and of corporate customers' willingness to commit to long-term arrangements. It is also tightly bound to operating profitability: as SAP shifts from classic license sales to higher-margin cloud subscriptions, margins must keep pace. Should growth in recurring revenue lose steam, the entire earnings profile comes under scrutiny — and the question becomes whether contracted revenue is expanding fast enough to justify the heavy spending on cloud infrastructure and software development.

The bull case rests on SAP holding or even extending its cloud growth rates at an elevated level. A persistently strong order intake would show that large customers are migrating core processes to modern platforms quickly despite macroeconomic headwinds. The successful transition at logistics provider DACHSER, which moved its HR operations to SAP S/4HANA via RISE with SAP, illustrates the systems' continued operational relevance.

UBS Stays on the Sidelines

Not everyone shares the enthusiasm. UBS analyst Michael Briest reaffirmed a "Neutral" rating on October 8 with a price target of EUR 201, anticipating slower growth in the Current Cloud Backlog and stressing that margin development must stay in focus. Acquisition costs could add further weight: on October 6, SAP agreed to buy Belgian AI firm TechWolf, integrating its platform and research team. The deal is targeted to close in the fourth quarter of 2026, subject to regulatory approvals, with financial terms undisclosed. If organic growth falls short of expectations, such cost factors will draw sharper investor attention.

Chart-wise, the picture hinges on a clear directional decision. So long as the stock trades above its 50-day moving average of EUR 183.00, the technical setup remains tilted upward; a break below that support under heavier selling pressure would risk a slide back into lower valuation territory.

The October 21 Verdict

Clarity arrives shortly. SAP will publish its third-quarter 2026 results on October 21 at 22:05, followed by an analyst and investor call at 23:00. The cloud backlog and operating margin figures disclosed there will determine which of the two narratives — accelerating cloud momentum or fading order growth — carries the day. Year to date, the stock is down 9.8%.