SAP Stock Jumps as Earnings Beat Eases AI Fears -- Barrons.com

By Nate Wolf and George Glover

Shares of SAP surged Friday as the German tech company shook off concerns about its software business with a better-than-expected quarterly earnings report.

The results indicated that artificial-intelligence tools and hardware spending aren't replacing SAP, which offers cloud services and operations software for enterprises.

SAP posted earnings of EUR1.89 ($2.15) a share in the second quarter, up from EUR1.45 last year and above analysts' consensus estimate of EUR1.68, per FactSet. Revenue rose 11% from a year ago on a constant-currency basis to EUR9.88 billion, exceeding Wall Street's call for EUR9.85 billion.

SAP's American depositary receipts jumped 9.3% to $160.01 on Friday, set to end a five-day losing streak.

The company's cloud unit -- by far its largest business segment -- grew 24% year over year on a constant currency basis. Investors are likely to be pleased with the cloud backlog, which grew 26% to EUR22.9 billion.

"In a quarter where results were not expected to be strong, we will take our slight organic upside to cloud backlog growth and mostly reiterated guidance and move right along," Jackson Ader, an analyst at KeyBanc, wrote Friday.

KeyBanc reiterated an Overweight rating on SAP stock, but lowered its price target to EUR200 from EUR235 to reflect falling valuations across the sector. SAP shares trade at 17 times projected earnings over the next 12 months, down from 37 times a year ago.

SAP's cloud business has benefited in recent years from enterprises shifting their data to the company's platform from on-site databases.

But that shift has coincided with a sharp decline in software support revenue, which fell 7% in the second quarter. Worries about artificial-intelligence tools lessening the need for certain enterprise software tools has weighed on the stock, which is down 40% this year.

SAP said the company's cloud platform offered embedded AI solutions that generic AI tools can't match.

More than 90% of the 50 largest deals that SAP signed over the quarter included some sort of AI component, CFO Dominik Asam told Barron's in a call on Friday.

"We firmly believe that our customers do see SAP as a key contributor to their own AI stories," he added.

SAP reiterated its outlook for revenue and cash flow for the full year. It lowered its guidance for non-adjusted operating profit by EUR100 million due to dilution from two acquisitions closed in July.

Write to Nate Wolf at nate.wolf@barrons.com

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July 24, 2026 14:37 ET (18:37 GMT)