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SAP shares are on track for their biggest one-day drop since 2020 after Europe’s largest software company spooked investors over whether its cloud computing business can sustain its rapid growth.
The German group on Thursday said growth of its cloud backlog, a key measure of contracted future sales, would “slightly decelerate” this year from the 25 per cent achieved in 2025, with recent large contracts set to ramp up more slowly than expected.
It also forecast cloud revenue growth of 23 to 25 per cent for 2026, broadly in line with analysts’ expectations but pointing to a slowdown from 26 per cent at constant currencies in 2025.
SAP’s shares fell more than 15 per cent on Thursday to their lowest level in almost two years and on course for their biggest daily decline since October 2020.
The tech group’s outlook comes amid growing concerns among investors over the impact of AI on the software industry. The sector has suffered a sell-off in recent weeks, driven by fears that big businesses will use the technology’s tools to replace traditional software services.
SAP has shed more than 30 per cent of its market capitalisation over the past 12 months, alongside similar falls at US-based rivals Salesforce and ServiceNow. Shares in ServiceNow were down about 9 per cent in pre-market trading on Thursday after its results, published on Wednesday, also failed to calm investors’ concerns over AI.
SAP, which is based in Walldorf, south-west Germany, is one of Europe’s few big tech groups. It is in the midst of shifting its business from selling on-premises software licences towards more lucrative cloud service contracts.
That shift had previously cheered investors, helping to propel SAP last year to briefly become Europe’s most valuable listed company, overtaking Danish drugmaker Novo Nordisk. But the recent sell-off has reversed some of those gains, with the top spot now held by Dutch chipmaker ASML.
SAP chief executive Christian Klein sought to play down the market reaction, saying the company needed to stay focused on executing its strategy rather than responding to short-term share price moves.
He said software-as-a-service companies were “in the penalty box” as investors questioned their role in an era when applications can increasingly be generated by AI.
But he argued that SAP was well positioned to benefit by embedding AI into business data and processes.
“It always starts with the chips and the hardware, but to create real value for businesses, you have to move up the stack,” Klein said. “These AI agents need to understand business data and processes to deliver value for customers, and we are uniquely positioned to win in business AI.”
SAP tried to reassure investors in its full-year earnings statement, saying that the group’s current cloud backlog laid a “strong foundation” for accelerating total revenue growth through to 2027.
The group also pointed to AI as an increasingly important growth driver, saying AI features were included in more than two-thirds of cloud orders booked in the fourth quarter.
“The update was solid, but not enough to clear the high execution bar,” said analysts at Citigroup, adding that SAP “needed an all-round acceleration” to counter weak sector sentiment.