SAP's 2026 cloud forecasts disappoint, shares endure biggest daily loss since 2020
A logo on the SAP exhibition space at the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris, France June 15, 2022. REUTERS/Benoit Tessier
Jan 29 - German software company SAP's 2026 cloud revenue forecast failed to meet market expectations on Thursday and the company's shares fell by 15 per cent, marking their steepest one-day decline since October 2020.
JPMorgan noted SAP's cloud backlog and 2026 revenue guidance fell short of projections, sparking a selloff despite its full-year performance aligning with analysts' forecasts.
SAP briefly became Europe's largest company by market capitalisation last March, but gave up the European crown later in the year due to concerns about artificial intelligence's potential disruptive effects on its sector.
"SAP needed an all-round acceleration to fight the trough sector sentiment, and with puts and takes in the update we see shares underperforming," Citi analyst Balajee Tirupati said.
By 1431 GMT, SAP shares had fallen as much as 17 per cent to its lowest since February 2024, wiping over 40 billion euros off its market capitalisation and dragging Frankfurt's benchmark index lower in broadly positive European markets.
The stock was last down 15.8 per cent, near the session's lows.
Other software stocks in Europe were also lower, with Dassault Systemes in Paris down as much as 2.7 per cent and Sage falling more than 3 per cent in London, both trading near multi‑month lows.
Software stocks in the U.S. also took a hit, with Salesforce down 6.3 per cent, Photoshop maker Adobe down 2.5 per cent lower and cloud security firm Datadog down about 5 per cent. Shares of ServiceNow plunged 9 per cent despite the company's upbeat forecast.
2026 FORECAST FALLS SHORT
SAP expects cloud revenue to grow between 23 per cent and 25 per cent in 2026. More critically, current cloud backlog growth will slightly decelerate in 2026 after posting 25 per cent growth in 2025, though SAP expects total revenue growth to accelerate through 2027 as more customers migrate to cloud-based solutions.
SAP's CFO Dominik Asam said in an analyst call this represents a bigger-than-anticipated slowdown.
Asam pinned the slowdown on customers shifting to larger projects that take longer to ramp up, as well as increased demand for sovereign cloud driven by geopolitical tensions. He said these government and defense deals have longer sales cycles and often don't show up in backlog due to termination clauses.
JPMorgan noted that "cloud backlog and cloud revenue growth is ultimately what investors are zoomed in", adding a negative market reaction could be expected.
The disappointment comes as software stocks face broader sector headwinds.
Oddo BHF analyst Nicolas David said the sharp decline reflects "overall distrust of the market regarding software names" as investors rotate capital into semiconductors. "In the current context you can't miss by even the slightest portion," he said.
YEARLY RESULTS IN LINE
For the full year, cloud revenue surged 26 per cent at constant currencies to 21 billion euros, while total cloud backlog climbed 30 per cent to 77.3 billion euros. CEO Christian Klein said SAP Business AI has become a growth driver, included in two thirds of Q4 cloud order entry.
SAP also announced a two-year buyback program worth up to 10 billion euros.
The Walldorf-based company has spent the past year moving legacy database customers to the cloud while executing a 3.2-billion restructuring program. Major Q4 customer wins included Dexco, Lockheed Martin and Rolls-Royce.
($1 = 0.8341 euros)
