SAP's Summer Rebound: Clearing Regulatory Hurdles While the Margin Question Lingers

SAP shares rise 3.5% as German antitrust probe closes, cloud backlog grows 27%, and €2.6B buyback launches.

The software giant's shares have clawed back ground in recent sessions, closing Monday's trading around the €165 mark after gaining roughly 3.5 percent. The bounce reflects a rare alignment of favorable developments — a regulatory cloud lifting, a hefty capital return program, and cloud bookings that continue to defy broader software-sector jitters.

The Antitrust Chapter Closes

At the heart of the recent optimism is a decision handed down on July 30 by Germany's Federal Cartel Office. The watchdog formally closed its preliminary probe into SAP's data-access practices without imposing any conditions. The investigation had been triggered by a complaint from rival Celonis, which alleged that SAP was leveraging its market dominance to restrict third-party access to customer data. For investors, the resolution removes a nagging overhang that had weighed on sentiment for months.

The antitrust all-clear arrived just days after SAP delivered its second-quarter scorecard, and together the two events have given the stock a visible tailwind. The shares now sit roughly 5.4 percent below their 200-day moving average — a technical marker that suggests the longer-term downtrend hasn't been fully reversed, even as the recent momentum builds.

Cloud Bookings Tell a Compelling Story

The quarterly numbers, released July 23, showed cloud revenue climbing 22 percent to €6.28 billion. More telling for the trajectory ahead is the current cloud backlog, which expanded 27 percent on a currency-adjusted basis to €22.9 billion. That metric — essentially contracted revenue not yet recognized — offers a forward-looking gauge of demand that investors have latched onto as evidence the growth engine remains intact.

Yet the margin picture is more nuanced. While cloud sales grew at a double-digit clip, non-IFRS operating profit rose just 7 percent to €2.74 billion in the quarter. That divergence between topline momentum and bottom-line expansion is the central tension animating the bull-bear debate.

Management addressed the gap head-on by trimming the full-year non-IFRS operating profit guidance for 2026 to a range of €11.8 billion to €12.2 billion, down from the prior €11.9 billion to €12.3 billion. The revision, the company said, stems from dilution effects tied to the acquisitions of Dremio and Prior Labs — the latter deal closing July 17 and aimed at bolstering SAP's Business AI platform. The adjustment is modest, but it raises a legitimate question: how long will the integration of these newly acquired units continue to weigh on profitability before scale benefits kick in?

Capital Returns and Insider Confidence

Supporting the share price from another angle is the company's capital return program. On July 27, SAP launched the second tranche of its 2026 buyback, authorizing up to €2.6 billion — roughly 18.5 million shares — with the overall program sized at €10 billion through the end of 2027.

CEO Christian Klein has also put his own money where his mouth is. A regulatory filing shows he acquired 2,052 shares on July 24 at an average price of €133.60, a total outlay of €325,219 — a purchase made well below current trading levels, signaling conviction in the stock's valuation.

There's movement on the shareholder register as well. Anchor investor Harald Tschira increased his voting stake from 0.57 percent to 4.22 percent through new voting agreements with additional family entities, a move disclosed in a Friday filing that bolsters the company's long-term oriented shareholder base.

What the Sell Side Makes of It

Analyst reactions have been broadly constructive, though not without some recalibration. Jefferies reaffirmed its "Buy" rating on July 28 with a price target of €210, pointing to sustained momentum in cloud subscriptions. Goldman Sachs also maintained "Buy" on July 27 but trimmed its target from €230 to €215. Both figures remain comfortably above the current share price, even if the Goldman cut signals a more cautious posture on near-term upside.

Adding to the narrative is a recently announced innovation partnership with insurer SIGNAL IDUNA to jointly develop AI applications for the insurance sector — a deal that underscores SAP's push to embed its AI capabilities across vertical industries.

The Road Ahead

For the rally to extend, the market will want to see the cloud backlog continue expanding and the buyback providing steady support. The bear case rests on the margin front: if integration costs from the Dremio and Prior Labs deals prove stickier than anticipated, the recent gains could quickly lose their foundation. The underlying dispute over data access with competitors like Celonis also hasn't fully disappeared from the industry's rearview mirror, even if the regulatory chapter has closed for now.

The next meaningful checkpoint arrives October 21, when SAP reports third-quarter results. Until then, the margin trajectory remains the key metric — the one that will determine whether this summer's rebound matures into a sustained trend or fades as a technical bounce.