SAP’s Buyback Machine Grinds On, But the Analyst Chorus Is Turning Sour

The arithmetic is straightforward enough: SAP’s shares closed Friday at €185.10, down 0.6 percent on the day, 2.6 percent lower on the week, and a full 24 percent adrift of the €242.00 peak touched last October. Since the start of the year, the stock has shed 12 percent. Yet the software giant’s treasury desk has not flinched.

Between August 24 and 28, SAP bought back another 676,583 of its own shares on Xetra, the fifth interim disclosure under a buyback program announced in January that authorizes repurchases of up to €10 billion through the end of 2027. By the end of June, the company had already spent roughly €2.6 billion to acquire more than 16.28 million shares at an average price of €161.16. The message from Walldorf is unambiguous: management sees value where the market appears hesitant.

That hesitancy has become harder to ignore. The analyst community is fracturing in ways that would have seemed unlikely just a few months ago. Late August brought a telling sequence of downgrades. UBS lifted its price target from €164 to €201 but simultaneously cut its rating from “Buy” to “Neutral,” citing a dearth of near-term catalysts in the AI business. Days later, Spain’s Grupo Santander followed suit, downgrading SAP from “Outperform” to “Market Perform” on September 1, with analysts flagging concerns about monetization of the company’s AI strategy and the current valuation. AlphaValue/Baader Europe went further still, slapping a “Sell” rating on the stock.

The crux of the skepticism centers on SAP’s AI agents push. Critics have grown impatient with the pace of the company’s AI-agent offensive, questioning when — and how — the technology will translate into measurable revenue. The company’s own numbers tell a more flattering story. Second-quarter results published in July showed cloud revenue up 24 percent on a currency-adjusted basis, with the cloud ERP suite climbing 27 percent. The current cloud backlog swelled to €22.9 billion, and total revenue rose 11 percent to €9.878 billion.

Management did have to trim its 2026 outlook, however. The guidance range for non-IFRS operating profit slipped from €11.9–12.3 billion to €11.8–12.2 billion, a consequence of dilution from two recent acquisitions: data lakehouse provider Dremio, acquired in early July, and Freiburg-based AI startup Prior Labs, snapped up just over a month ago. The combined dilution exceeds €100 million. SAP has earmarked more than €1 billion over the next four years to integrate Prior Labs’ tabular foundation models for business data forecasting, with the startup continuing to operate as a standalone brand within the group. The full-year cloud revenue forecast of €25.8–26.2 billion — growth of 23 to 25 percent on a currency-adjusted basis — remains intact.

Should investors sell immediately? Or is it worth buying SAP?

The share price has responded positively to the M&A activity, gaining 33.6 percent since the Prior Labs acquisition closed. That rally has carried the stock roughly 15 percent above its 50-day moving average of €161.58, suggesting the recovery from the summer trough retains some momentum even as the distance to the 52-week high underscores how far the stock has fallen.

Regulatory overhangs have also cleared. Germany’s Federal Cartel Office declined in late July to open cartel proceedings, following the European Commission’s earlier decision to close its investigation into SAP’s on-premise maintenance and support policies. The company welcomed both rulings.

Insiders are putting their money where their mouths are. Board member Thomas Heinrich Saueressig recently disclosed a share purchase under directors’ dealings rules — a gesture markets traditionally read as a signal of executive confidence, even if it rarely moves the needle on its own. Institutional heavyweight BlackRock, meanwhile, nudged its voting stake to 6.75 percent in early August, marginally up from 6.74 percent.

The picture that emerges is one of competing signals: a company aggressively returning capital and buying growth assets, set against a growing chorus of analysts who see limited near-term upside until the AI monetization story becomes more concrete. The next test comes on October 21, when SAP reports third-quarter results. Whether the robust cloud growth can finally silence the skeptics — or whether the downgrades prove prescient — will hinge on the numbers delivered that day.