Short Description
SAP stock plummets after reporting weak cloud backlog growth, raising investor concerns about the legacy software giant’s position in the AI era.
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3 minutes, 15 seconds
**Main Article
SAP Stock Plunge: A Cloud Growth Warning Sign
German software giant SAP experienced its most significant single-day stock drop since 2020, falling as much as 14% after its fourth-quarter earnings revealed a major slowdown in a critical metric. The company’s current cloud backlog, a key indicator of future subscription revenue, grew by only 16% to €21.1 billion, well below analyst expectations of 26% growth. This disappointing performance sent shockwaves through the market, placing the stock on track for its lowest close in months and highlighting intense investor scrutiny on cloud services growth rates for legacy tech firms.
While SAP reported a slight increase in total revenue to €9.7 billion and a rise in operating profit, the cloud backlog miss overshadowed these figures. Company leadership cited complex, long-term transformation deals and legal clauses as factors dampening the growth figure by about one percentage point. CEO Christian Klein defended the results, stating the backlog lays a “strong foundation” for accelerated growth through 2027, though the company itself guided for a further deceleration in cloud backlog growth for 2026.
The reaction underscores a broader anxiety: how will established players like SAP compete in the AI boom? In an interview with CNBC, CFO Dominik Asam directly addressed the existential question posed by generative AI, which can transform software development. “Will the customers now not be able to do everything themselves?” he asked, noting the imperative for SAP to aggressively embed AI into its own research and development to maintain its scale advantage. The market’s harsh verdict suggests investors are seeking clearer proof that SAP can translate its AI investments into accelerated cloud growth and defend its market position against nimbler, cloud-native competitors.
Short Summary
SAP’s stock plunged due to weaker-than-expected cloud backlog growth, a vital sign of future revenue. While overall profits rose, the slowdown has amplified investor concerns about the legacy software leader’s ability to accelerate its cloud transition and harness the AI boom effectively against rising competition. The earnings report signals a critical period for SAP to demonstrate its AI strategy can fuel growth.
