SAP's cloud performance alleviates AI concerns, although profit forecasts have declined.

      SAP delivered the results investors were anticipating. Europe’s leading software firm reported a 22% increase in cloud revenue, reaching €6.28 billion in the second quarter, surpassing expectations, according to SAP. Additionally, its cloud backlog, which indicates future sales, surged by 26%. The company's stock climbed over 6% in Frankfurt.

      This relief is the main narrative. As Bloomberg noted, SAP's shares have fallen approximately 35% this year due to concerns that AI might undermine the enterprise-software subscription model on which SAP relies. The announcement came during a volatile week for tech earnings. A strong performance in the cloud sector serves as the clearest reassurance that SAP’s clients continue to sign on rather than departing.

      A mixed report with revised forecasts

      However, the overall outlook wasn’t entirely positive. Operating profit increased by 7% to €2.74 billion, yet fell short of analyst expectations. Furthermore, SAP adjusted its profit forecast for 2026 to a range of €11.8-12.2 billion, as reported by the Wall Street Journal. This revision reflects the costs associated with two acquisitions made in July: the data company Dremio and the AI startup Prior Labs.

      SAP is making significant investments to keep pace. CEO Christian Klein has redirected budgets and reorganized management to support an AI initiative, and the company has reduced hiring and travel expenses to facilitate this. It is also encouraging customers to transition from outdated on-premises software to the cloud, and there will soon be higher charges for maintaining legacy systems.

      Skepticism about the AI narrative

      The more pressing question is the effectiveness of SAP’s own AI solutions. Klein describes it as an "Autonomous Enterprise" that utilizes AI based on a company’s essential data. However, some customers have expressed doubts regarding the effectiveness of SAP’s initial AI offerings, and analysts appear to be somewhat indifferent. “SAP still needs to do more to make its AI narrative convincing,” remarked Rebecca Wettemann of Valoir. “Merely having all its software on the same platform isn’t a strong enough incentive to deploy enterprise AI there.”

      Thus, the quarterly results present a mixed picture. The cloud figures indicate that AI has not disrupted SAP’s business, which was reassuring for investors. Nevertheless, SAP has yet to demonstrate that AI will drive growth, even as it invests to combat competition from companies like Anthropic. For the moment, being deemed “not a victim of disruption” is sufficient.