Backblaze (BLZE) drew fresh attention after first quarter 2026 results, with revenue of US$38.67 million and a net loss of US$6.15 million, alongside higher full year revenue guidance.

The beat and raise has been met with sharp buying interest, with Backblaze’s share price at US$7.50 and a 30 day share price return of 107.18%, while the 1 year total shareholder return sits at 42.86%. This suggests strong recent momentum on expectations for AI related storage demand.

If this jump in sentiment has you thinking about where growth stories could emerge around AI infrastructure, it may be worth sizing up 40 AI infrastructure stocks.

With the stock up more than 100% in a month and trading at US$7.50 against an analyst price target of US$9.34, the key question now is whether Backblaze still offers upside or if the market already reflects expectations for future growth.

Most Popular Narrative: 10% Undervalued

Backblaze’s most followed narrative pegs fair value at $8.34 per share, modestly above the recent $7.50 close, framing this post earnings surge in valuation context.

The explosive increase in AI workloads is driving a step-function expansion in Backblaze's addressable market, AI customer data stored grew 40x year-over-year, and 3 of their top 10 customers are now AI companies, positioning B2 Cloud as a direct beneficiary of surging global data creation and accelerating secular demand, likely resulting in accelerated multi-year revenue growth.

Want to see how this AI data surge gets translated into a price tag near the current level? The narrative leans heavily on future revenue growth, margin expansion, and a rich earnings multiple that is closer to premium IT peers than to loss making small caps. Curious which assumptions have to hold for that to stack up over time?

Result: Fair Value of $8.34 (UNDERVALUED)

However, the narrative can be tested quickly if B2 Cloud growth remains patchy or if higher capex and margin pressure weigh more heavily on cash generation.

Another View on Valuation

The fair value narrative points to Backblaze being about 10% undervalued at $8.34 per share, but the current P/S of roughly 3x tells a different story. That is higher than the estimated fair ratio of 2x, the US IT industry at 2.1x, and peers at 2x, which signals real valuation risk if sentiment cools.

When a stock trades this far above both its sector and a fair ratio the market could move towards, it often comes down to one question: how confident are you that the growth story will stay strong enough to support that premium?

Next Steps

If this all sounds mixed, that is exactly why it helps to look at the numbers yourself and form your own view quickly. You can start with the 2 important warning signs.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.