SAP’s Insider Buy and €2.6 Billion Buyback Put Faith in Cloud Growth Over Near-Term Margin Pain

SAP shares surged 25.75% post-earnings despite a trimmed profit forecast, as investors bet on AI-driven cloud growth and insider buying.

When SAP reported second-quarter results on July 23, the market got a mixed bag: a booming cloud business alongside a trimmed profit forecast. Yet rather than punishing the stock, investors drove it up 25.75% in seven sessions — a rally that now faces a critical test of whether the company’s aggressive AI bet will pay off.

The cloud engine is firing on all cylinders. Revenue from cloud subscriptions climbed 24% to €6.3 billion, while the current cloud backlog — a key gauge of future billings — expanded 26% on a currency-adjusted basis to nearly €23 billion. A separate reading from the company’s half-year report put that backlog at €22.9 billion, representing 27% growth. Either way, the trajectory is unmistakable.

But the cost of that momentum is becoming visible. SAP lowered its full-year guidance for currency-adjusted non-IFRS operating profit growth to a range of 13% to 17%, down from the previously forecast 14% to 18%. Management cited dilution from two July acquisitions — most notably the July 17 purchase of AI startup Prior Labs — and heavy investment in the “Business AI” push. Chief Executive Christian Klein has made clear the strategy is deliberate: he says Business AI is now a deciding factor in over 80% of new cloud deals.

That statistic is the linchpin. If the AI attachment rate stays elevated, the near-term margin sacrifice may prove a worthwhile trade for long-term market share. If it falters, the profit warning could look like a harbinger rather than a hiccup.

Insider conviction meets buyback firepower

The boardroom is putting its money where its mouth is. On July 24, the day after the results landed, Klein bought 2,052 SAP shares at an average price of €158.49, for a total outlay of roughly €325,219. Insider purchases at that level are typically read as a vote of confidence in the company’s trajectory.

That personal bet is running alongside a corporate one. On July 27, SAP launched the second tranche of its €10 billion share buyback program, authorizing the repurchase of up to €2.6 billion in own shares through January 2027. The message to the market is that management views the current valuation as compelling.

The stock closed at €162.22 on the Wednesday of the announcement, up 3.14% on the day. Still, the year-to-date picture is stark: the shares are down 22.57% since January, and despite the recent surge, they remain 7.55% below the 200-day moving average. The relative strength index sits at 69.2, suggesting the rally is already stretched.

Analyst camp split on whether the margin squeeze is temporary

Wall Street is wrestling with the same question. Goldman Sachs analyst Mohammed Moawalla reaffirmed a buy rating on July 29 but trimmed his price target from €230 to €215, citing short-term margin pressure alongside robust cloud growth. Jefferies’ Charles Brennan kept a buy with a €210 target, praising SAP’s strategic maturity in the AI transition.

Barclays held its “Overweight” rating but cut its target from €255 to €220, flagging near-term cost uncertainty. JPMorgan’s Toby Ogg stuck with “Neutral” and a €175 target, warning that margin risks could materialize if AI investments don’t translate into revenue quickly enough. The DZ Bank went further, maintaining a sell recommendation after reviewing the quarterly report.

On the bullish side, UBS and Berenberg joined Goldman and Jefferies in keeping buy ratings. The consensus is far from unanimous, but the majority still sees the cloud momentum as strong enough to outweigh the profit warning — at least for now.

New partnerships and a key date on the calendar

SAP is also reinforcing its narrative with marquee customer wins. On July 24, Airbus expanded its use of “RISE with SAP” and the Sovereign Cloud to transform core business processes. Days later, SAP and insurer SIGNAL IDUNA announced an innovation partnership to develop AI solutions for the insurance industry using the SAP Business AI Platform. Such reference clients lend credibility to Klein’s claim that AI is driving real commercial decisions.

The next major checkpoint comes on October 22, when SAP reports third-quarter results. By then, investors will have a clearer view of whether the acquisition-related dilution is fading as expected — or whether the buyback and insider buying are merely masking deeper margin concerns. Until that data point arrives, the stock’s fate hinges on one question: can the cloud backlog keep growing fast enough to justify the cost of getting there?