SAP's Cloud Momentum Faces Its First Test: Can Buybacks and AI Spending Keep the Rally Alive?

SAP shares rally 32% in a month, but overbought signals, AI spending, and mixed analyst targets cloud the outlook.

The software giant's stock has been on a tear, but the forces propelling it forward are more complex than a simple growth story. Over the past 30 days, SAP shares have surged 32 percent, with the stock trading at €183.70 on Wednesday, up 1.0 percent from Tuesday's close of €181.90. Yet beneath that momentum lies a tangle of signals: analysts are trimming price targets even as they maintain bullish ratings, the company is buying back its own shares at a steady clip, and a wave of AI-focused acquisitions is reshaping both the product roadmap and the profit outlook.

That 30-day rally has pushed the Relative Strength Index to 73.1, a technical reading that typically flags overbought conditions. The stock's annualized volatility of 45 percent also underscores just how far the shares have strayed from their calmer trading patterns of previous years.

Buyback Machine Keeps Humming

SAP's board has shown no hesitation about putting money behind its own conviction. Between August 3 and 7, the company repurchased roughly 2.9 million shares at an average price of €169.72. The following week, from August 10 to 14, it added another 50,000 shares — 10,000 per trading day — bringing the total under the current buyback program to 5,128,529 shares.

The steady cadence of repurchases serves as a quiet counterweight to the analyst chatter, signaling that management views the stock as reasonably valued even after the recent run-up. It also provides a technical floor for the share price, independent of the news cycle.

A House Divided on Valuation

The analyst community, meanwhile, is sending mixed messages. Berenberg trimmed its price target from €215 to €205 on Friday while reaffirming its "Buy" rating — a move that came on the same day Erste Group Bank raised its earnings estimate for the current year. The divergence illustrates the difficulty of pricing in SAP's trajectory right now.

The broader consensus remains firmly constructive: across 28 analysts, there are 24 buy ratings and four holds, with not a single sell recommendation on the books. The average price target stands at €203.22, implying roughly 10.6 percent upside from the stock's recent level of around €183.75. But the range of individual estimates is remarkably wide — from €131.30 on the low end to €304.50 on the high end — reflecting sharply different views on how quickly large enterprise customers will embrace the company's AI offerings after a period of softer adoption.

Barclays also weighed in late last month, cutting its target from €255 to €220 while maintaining an "Overweight" stance, citing near-term cost uncertainties tied to the acquisition spree.

The AI Shopping Spree and Its Price Tag

That spending spree is central to understanding both the optimism and the caution. SAP has been aggressively assembling an AI arsenal. In early July, the company completed its acquisition of Dremio, a provider of an open data lakehouse platform designed to strengthen agentic AI applications and ease the integration of SAP data with third-party sources. That deal followed the May closing of the Reltio acquisition, a master data management specialist.

The same month brought the purchase of Prior Labs, a pioneer in tabular foundation models, which SAP plans to develop into a frontier AI center for structured data. The company has committed to investing more than €1 billion in the lab over the next four years, while keeping it as a standalone unit.

Internally, SAP is also reorganizing around AI. In early July, operational responsibility for parts of the Product & Engineering organization shifted from Muhammad Alam to CEO Christian Klein on an interim basis. Two new units — the SAP Business AI Platform & CTO and the SAP Autonomous Suite — now report directly to Klein, a clear sign that AI strategy is being consolidated at the highest level of the company.

The Numbers Behind the Narrative

The operational results backing this strategy showed solid second-quarter performance, reported on July 23. The current cloud backlog grew 26 percent on a currency-adjusted basis to €22.9 billion, while cloud revenue expanded 24 percent. The core Cloud ERP Suite was the standout, growing 27 percent, and total revenue rose 11 percent on a currency-adjusted basis.

The profit picture, however, required a slight recalibration. SAP trimmed its 2026 non-IFRS operating profit guidance from €11.9–12.3 billion to €11.8–12.2 billion, attributing the change to a dilution effect of more than €100 million from the Dremio and Prior Labs acquisitions. The cloud revenue forecast of €25.8–26.2 billion remained untouched, and the company expects overall revenue growth this year to track at a similar level to 2025, with acceleration not anticipated until 2027.

Regulatory Tailwinds and the Road Ahead

External factors have also been working in SAP's favor. The European Commission closed its review of maintenance and support guidelines for on-premise solutions in early July, a conclusion SAP welcomed. The German cartel office had already decided in late July not to open an abuse-of-process case against the company — a development that has contributed to a 7.9 percent gain in the stock since that announcement.

The next major checkpoint arrives on October 21, when SAP reports third-quarter results after market close. Investors will be watching whether the cloud growth engine can maintain its pace despite the weight of recent acquisitions — and whether the buyback program continues to provide ballast for a stock that has already traveled a long way in a short time.