SAP's Rally Cuts Both Ways: Sector M&A Buzz Meets a Cloud Backlog Milestone
Published on 08/24/2026 at 09:31 | Redaktion boerse-global.de
The software sector's recent surge has been a welcome reprieve for SAP shareholders, but the German enterprise-tech giant's recovery story is more layered than a simple bounce off the lows. A broad European software rally — sparked by reports of Silver Lake's potential acquisition of Workday — lifted the sector by 2.7 percent on Thursday, with SAP among the primary beneficiaries. The stock closed Friday at 186.70 euros, up 0.7 percent on the day, extending a seven-session gain of 4.0 percent.
That momentum has been building for weeks. Over the past 30 days, SAP shares have climbed roughly 33 percent, a striking reversal for a stock that spent much of 2026 in negative territory. Yet even after this run, the shares remain 23 percent below their 52-week high of 242.00 euros, set on October 23, 2025. Year-to-date, the stock still carries a 10 percent deficit.
Cloud Backlog Points to Structural Strength
The rally isn't purely sentiment-driven. SAP's July figures for the second quarter and first half of 2026 confirmed the underlying cloud momentum. Current cloud backlog expanded 27 percent to 22.9 billion euros, while cloud revenue grew 22 percent — or 24 percent on a currency-adjusted basis. The cloud ERP suite proved particularly resilient, advancing 25 percent, or 27 percent in constant currency. Total revenue rose 9 percent, with IFRS operating profit up 8 percent.
Operationally, SAP has been busy on multiple fronts. The company landed NTT DATA as a marquee customer for its cloud and AI strategy, with the Japanese IT services firm adopting SAP SuccessFactors and the SAP Business Data Cloud, including the Joule AI assistant, to transform its global HR operations and corporate culture. The announcement came last Wednesday.
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Regulatory Overhang Cleared
Two long-running regulatory matters have also been resolved. In early July, the European Commission accepted legally binding commitments from SAP addressing competition concerns related to support services in the aftermarket for on-premises ERP software. Shortly thereafter, at the end of July, Germany's Federal Cartel Office closed its preliminary review of the company, stating there were no current indications of abuse regarding data access. Both proceedings concluded without formal abuse findings.
AI Acquisitions Come With a Cost
SAP's summer acquisition spree signals the depth of its AI ambitions — but also carries a financial sting. The company completed two purchases: Dremio, an open data lakehouse platform provider, in early July, followed by Prior Labs, a pioneer in tabular foundation models, in mid-July. SAP has committed to investing more than one billion euros in Prior Labs as a standalone unit over the next four years.
The dilution from these deals has forced SAP to revise its 2026 non-IFRS operating profit outlook, with an expected hit exceeding 100 million euros. That revision, combined with a maturing cloud migration phase and lower EBIT and EPS forecasts, prompted several analysts to trim their price targets in late July — though notably, the ratings themselves have largely held.
Goldman Sachs cut its target from 230 to 215 euros while maintaining a "Buy" rating. Jefferies reaffirmed its "Buy" with a 210-euro target. Bank of America lowered its target, citing slightly weaker cloud margins in the second quarter. These adjustments predate the latest rally, leaving open the question of whether the current momentum will translate into upward revisions.
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Chart Signals a Caution Flag
The technical picture now presents a mixed message. The stock has climbed well above its 200-day moving average of 170.35 euros, suggesting the medium-term trend may have shifted. But the 14-day Relative Strength Index sits at 75.5, firmly in overbought territory and pointing to the possibility of near-term consolidation.
SAP also continued its share buyback program in August, acquiring 50,000 shares in the current month and bringing the total program volume to over 5.12 million shares — a quiet sign of management's confidence even as the market debates the sustainability of the rally.
For investors, the picture is deliberately two-sided: sector-wide M&A speculation and improving sentiment have fueled a powerful short-term move, yet structural questions around cloud margins and migration velocity remain unresolved. The stock's distance from its 52-week high — despite the recent surge — underscores how much ground SAP still needs to reclaim.
