Goldman Sachs reduced SAP’s 2026 gross margin outlook to 72.8% and trimmed EBIT growth forecasts amid higher costs and acquisitions.
SAP shares fell 8.9% after Goldman Sachs lowered its margin forecasts for the company ahead of its Q2 earnings. The bank cited higher hardware costs in the second half of 2026 as the primary pressure point, reducing gross margin estimates from 73.3% to 72.8%. Goldman also adjusted its full-year EBIT growth forecast to around 15%.
The firm noted that pending acquisitions, Dremio and Prior Labs, may dilute margins slightly but expects cost efficiencies to offset this impact. Cloud backlog growth assumptions remained largely unchanged, though Goldman slightly raised its FY26 forecast following the Reltio acquisition. Analysts also flagged near-term cloud revenue pressure from a Middle Eastern customer scaling back.
Despite the caution, Goldman maintained a Buy rating on SAP with a $311 price target. The stock has declined over 34% year-to-date, though analysts see 61% upside from current levels.