SAP's Two-Pronged Advance: Security Certifications and a €22.9 Billion Cloud Backlog

SAP gains 2.5% on BSI-certified encryption, NTT DATA HR cloud deal, and AI-focused restructuring under CEO Klein.

The software giant's Wednesday rally was fueled by more than just a buoyant market. SAP shares climbed 2.5 percent to €186.44, extending a recovery that now places the stock roughly 24 percent above its 50-day moving average of €149.86. Yet the company's recent momentum rests on a deeper foundation than a single day's trading — one built on government-grade security credentials, a sweeping internal reorganization, and a cloud order book that keeps expanding.

A Compliance Milestone for German Authorities

At the heart of Wednesday's gains was a certification that could unlock a long-cautious customer segment. SAP has deployed Layer-1 encryption from Adva Network Security, part of the Adtran group, to protect connections between its data centers in Walldorf and St. Leon-Rot. The technology carries approval from Germany's Federal Office for Information Security (BSI) up to the VS-NfD classification level.

That seal of approval matters strategically. Public authorities, critical infrastructure operators, and heavily regulated industries have historically hesitated before migrating sensitive workloads to the cloud. With BSI-certified encryption linking its two German facilities, SAP can now argue that sovereign cloud requirements are met without relying on US hyperscalers — a persuasive pitch in a market where compliance hurdles run high.

NTT DATA's Vote of Confidence

The same day brought a second commercial win. NTT DATA, an IT services giant generating more than $30 billion in annual revenue and serving 75 percent of Fortune Global 100 companies, will standardize its global HR operations on SAP SuccessFactors and the SAP Business Data Cloud with the Joule AI assistant. The implementation spans twelve months, extending a partnership that has already lasted 36 years.

Analyst Maximilian Berger flagged an additional contract: energy supplier AEW has expanded its existing SuccessFactors deployment. Berger interprets the follow-on order as evidence of sticky customer relationships and sustained cloud growth in the HR segment.

Reorganization at the Top

These commercial wins arrive amid significant internal restructuring. In early July, SAP shifted operational responsibility for parts of its Product & Engineering organization 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, signaling that AI strategy will be tightly coordinated at the executive level.

The reorganization follows an aggressive acquisition spree. SAP acquired Prior Labs, a pioneer in tabular foundation models, in early July, committing more than €1 billion over four years to develop it into a frontier AI center for structured data. The lab will operate as an independent entity. The Dremio acquisition, a provider of open data lakehouse technology designed to strengthen agentic AI applications and link SAP data with external sources, has also closed. May brought the completion of the Reltio deal, adding master data management expertise.

Backlog Growth vs. Profit Guidance

The second quarter, reported July 23, demonstrated the operational substance behind this strategy. Current cloud backlog surged 26 percent on a currency-adjusted basis to €22.9 billion, while cloud revenue grew 24 percent. The core cloud ERP suite led the way with 27 percent growth, and total revenue rose 11 percent.

Profitability guidance, however, required a modest trim. The 2026 non-IFRS operating profit forecast was lowered from €11.9–12.3 billion to €11.8–12.2 billion, reflecting dilution from the Dremio and Prior Labs acquisitions — an impact SAP estimates at over €100 million. The cloud revenue outlook of €25.8–26.2 billion remains unchanged. Management expects this year's growth pace to continue through 2025, with acceleration anticipated only in 2027.

Analysts and Regulators Weigh In

The slightly reduced profit guidance drew a measured response from the analyst community. Barclays cut its price target from €255 to €220 in late July, citing near-term cost uncertainties, while maintaining an "Overweight" rating. The broader consensus remains firmly positive: 24 buy ratings and four holds across 28 houses, with no sell recommendations. The average price target of roughly €203 sits well above the pre-market level of €182.18.

Regulatory developments have added tailwinds. The European Commission concluded its review of maintenance and support guidelines for on-premise solutions in early July, a conclusion SAP welcomed. Germany's cartel office decided in late July not to open an abuse proceeding against the company — a decision that has helped lift the stock 7.9 percent since.

The Road Ahead

The shares still trade 23 percent below their 52-week high of €242.00, reached last October. For investors, two narratives are converging: operationally, SAP is converting security certifications and AI-enhanced cloud products into marquee reference customers, while the share price increasingly reflects that optimism in advance. Whether the momentum holds may depend on how many more large enterprises follow NTT DATA and AEW's lead — and on the third-quarter figures expected in October, which will reveal whether cloud growth can withstand the weight of recent acquisitions.