SAP Stock Climbs from Yearly Low on Ericsson and Madrid Cloud Deals, But RSI Near 87 Warns of Exhaustion

SAP stock rebounds to €151.88, RSI at 86.9 signals overbought; new cloud deals with Ericsson and Madrid, plus AI manufacturing project, support long-term cloud revenue growth.

SAP’s share price has clawed its way back from a yearly trough of around €137 hit in mid-May, reaching €151.88 on Friday. The rally has been swift and sharp, pushing the stock’s 14-day relative strength index to nearly 87 — a level that screams overbought. Yet beneath that technical warning, the software heavyweight is stitching together a more substantive narrative: fresh cloud contracts with Ericsson, Madrid’s public administration, and an industrial automation project that puts its AI assistant Joule into factory-floor action.

The Swedish telecommunications group Ericsson is expanding its relationship with SAP, adopting the “SAP Business Data Fabric” to scale AI applications across multiple business units globally. The move is designed to streamline data flows and accelerate cloud transformation — a stamp of approval from a major multinational that boosts SAP’s credentials as the data backbone for enterprise AI. Meanwhile, the city of Madrid has chosen SAP to modernise its tax and internal management processes, signalling that integrated cloud platforms are gaining traction in the public sector as well.

In manufacturing, Martur Fompak International has implemented an automated material-flow system powered by SAP software and guided by Joule, SAP’s generative AI copilot. The company reports higher throughput and fewer errors in material handling, giving SAP a concrete use case to pitch its vision of the “autonomous enterprise.” For investors, the payoff lies in whether these projects convert into recurring cloud revenue and fatter margins down the line.

Operationally, the first quarter offered a solid foundation. Revenue rose 6% to €9.56 billion, while earnings per share came in at €1.66. Currency?adjusted cloud revenue leapt 27% to nearly €6 billion, underscoring the shift toward subscription?based consumption. Management has maintained its full?year operating profit guidance of €11.9 billion to €12.3 billion. For 2026, analysts anticipate EPS of €7.22 and a dividend of €2.67, up from prior payouts.

The analyst community remains broadly optimistic. Deutsche Bank reiterated a €200 price target on 18 May, while Jefferies sees fair value at €230. The consensus target stands at €221.25, implying upside of more than 45% from current levels — a bullish call that rests on the momentum from SAP’s Sapphire conference and the completed Reltio acquisition.

Technically, the picture is mixed. The stock has broken above its 50?day moving average of €149.52 but still languishes well below the 200?day average of €193.38. From the 52?week high of €271.60, the shares remain deeply offside, down 25.23% year?to?date and 43.29% over the past twelve months. The RSI reading of 86.9 reinforces that the recent bounce has been fast and furious, leaving little room for error in the near term.

All eyes now turn to 23 July 2026, when SAP publishes its second?quarter results. The market will be watching for sustained cloud growth, margin expansion, and evidence that the Ericsson, Madrid and Martur Fompak deals are the opening acts of a broader pipeline — not isolated wins. Until then, the stock’s recovery carries conviction, but the overbought signal suggests that any stumble on the earnings front could hit harder than usual.