(Jan 29): SAP SE shares fell the most in more than five years as current cloud backlog in the fourth quarter slipped to a level that chief executive officer Christian Klein previously said would be a “disappointment”, adding to worries of how artificial intelligence (AI) will disrupt the software industry.
Its current cloud backlog, which reflects sales that will be booked over the next twelve months, grew by 16% in the fourth quarter to €21.1 billion and was up 25% at constant currencies, the Walldorf, Germany-based company said in a statement on Thursday. Klein had earlier said SAP was targeting 26% growth.
SAP shares fell as much as 16% to €164.86 in Frankfurt, the biggest intraday drop since Oct 26, 2020.
Klein has championed a pivot from selling software licences that clients operate on local servers to offering software subscriptions in the cloud since 2020. The move had been cheered by investors, helping propel SAP’s share price to a record last year. However, the emergence of AI-powered programming tools has fuelled concern that they could be used to create alternatives to the applications sold by enterprise software companies.
With generative AI “fears dominating in enterprise application software, we think most investors felt a beat here would be needed to start to shift the debate,” Morgan Stanley analysts including Adam Wood said in a note. The cloud backlog was “disappointing, especially given the company’s more positive commentary at the 3Q results and through year end”.
See also: Defence tycoon Strnad’s wealth soars to US$37 bil on IPO
Klein said on a call with analysts on Thursday that the threat to SAP’s business from AI is overblown, as large language models alone can’t be relied on for some use cases and that the underlying business data SAP has access to is necessary. “To make this very clear, we are winning deals because of AI. We are not losing deals because of AI,” he said.
Cloud revenue in constant currencies will grow at least 23% this year to between €25.8 billion and €26.2 billion, SAP said. That compares to an average analyst estimate of €26 billion, according to data compiled by Bloomberg.
See also: Macron’s Davos shades crash website of Italian maker, boosting shares
SAP chief executive officer Christian Klein said on a call with analysts on Thursday that the threat to SAP’s business from AI is overblown, as large language models alone can’t be relied on for some use cases and that the underlying business data SAP has access to is necessary.
Guidance for current cloud backlog shows a slight deceleration in 2026 from the fourth quarter, “implying expectations may drift lower on this metric,” JPMorgan analysts including Toby Ogg wrote in a note.
The current cloud backlog in the fourth quarter missed SAP’s own target. “If you look at the pipeline, and I’ve seen it many times, I would rather see 25% as a disappointment,” Klein said in the October call. “26% would be, in my eyes, a great result.”
The lower current cloud backlog was partly due to negotiations taking longer, Klein said in the Thursday call. “It’s a reflection of what is happening in the world,” he said, adding that clients are asking about potential sanctions, export restrictions and new regulations. “This is not a reflection of a demand issue.”
Cloud revenue in 2025 was €21.7 billion in constant currencies, SAP said, beating analyst estimates. Adjusted operating profit rose 27% to €2.83 billion in the fourth quarter.
SAP also announced a share buyback of as much as €10 billion through the end of 2027.
SAP is offering customers AI business applications in the cloud, where average spending per client is higher, to incentivize migrations from on-site servers. Software companies are increasingly focusing on AI agents that can complete tasks with less human involvement as demand for the technology grows.
The company has said it will stop most support for its main on-premise product line at the end of 2027, before canceling an extended maintenance option in 2030. It forecast that the rate of decline for software support revenue will accelerate in constant currencies as more clients switch to the cloud.
Uploaded by Felyx Teoh
