Morgan Stanley argues SAP stock is positioned for gains ahead of its fourth-quarter results. Analyst Adam Wood wrote that new channel checks point to potential upside in cloud backlog growth, skewing risk to the upside. The bank reiterated its Overweight rating, suggesting the market underestimates the software giant's momentum.

The key metric is cloud backlog, or CCB, which investors expect to grow about 26% ex-FX. Wood's survey of resellers and systems integrators supports this view. He notes SAP may need just 1-2 of its large pipeline deals to convert to hit 27% growth, with year-end budget dynamics supporting demand.

CEO Christian Klein has highlighted several mega transactions tied to AI value, though he cautioned nothing is guaranteed. The analyst suggests SAP needs to add €2.3 billion to its backlog to meet the 26% target, with at least €500 million of slipped deals potentially converting. Positive early 2026 setups are also expected.