Hook & thesis
Backblaze has been punished in the past for being ‘‘just backup’’. That narrative is shifting. Recent quarterly results and strategic deals show B2 Cloud Storage and AI-focused demand are growing materially faster than the legacy consumer backup business. For traders, that change in earnings composition and the accompanying improvement in unit economics create a defined risk-reward setup: buy the stock on a measured pullback and let renewed enterprise demand and partnerships drive the move to a logical target near prior highs.
Concretely: management reported a Q2 revenue beat and raised guidance on 08/05/2026, while announcing a $335M partnership with CoreWeave for AI storage solutions. These are the ingredients for a mid-term rebound. My trade: enter at $15.50, stop $13.50, target $22.00, holding for mid term (45 trading days) with a medium risk allocation.
What Backblaze does and why the market should care
Backblaze is a cloud provider that helps businesses and consumers store, protect, and serve data. Its core products are Computer Backup and B2 Cloud Storage. Historically the company was known for simple, low-cost consumer backup. Over the last year it has increasingly positioned B2 as a low-cost data lake for AI and media workloads - a higher-margin, higher-growth segment the market values more highly than pure consumer backup.
Why that matters: enterprises building AI stacks need cheap, scalable object storage for training datasets and inference stores. Backblaze's value proposition is cost per TB that undercuts many incumbents, which can become sticky once large datasets are in place. The CoreWeave tie-up is a direct route into AI infra budgets and could be a structural revenue evergreen if usage ramps.
What the numbers tell us
Use the following figures when assessing momentum:
| Metric | Figure |
|---|---|
| Last close / current price | $15.60 |
| Market cap | $962M |
| Enterprise value | $976.83M |
| Q2 revenue (reported) | $42.7M - revenue growth ~18% (reported 08/05/2026) |
| B2 Cloud Storage growth | 34% (reported 08/05/2026) |
| Free cash flow (trailing) | $20.603M |
| EV / Sales | 6.25x |
| EPS (trailing) | -$0.33 |
| 52-week range | $3.26 - $23.99 |
Two dynamics stand out. First, top-line: Q2 revenue of $42.7M and 18% year-over-year growth demonstrates the business is scaling again after cyclical weakness. Second, product mix: B2 Cloud Storage is accelerating (34% growth), which is a higher-value stream than consumer backup. Management also signaled improving profitability — prior commentary includes 26% adjusted EBITDA margins and a projection for positive adjusted free cash flow in H2 2026 — which gives the market a path from growth to sustainable cash generation.
Valuation framing
At a market cap near $962M and enterprise value roughly $977M, Backblaze is trading at an EV/Sales multiple of 6.25x. That multiple implies strong revenue growth and improving margins are priced in. But the company is still on a path to GAAP profitability (EPS is negative at -$0.33), and free cash flow of about $20.6M means the market is paying for growth that must materially accelerate to sustain current multiples.
Compare qualitatively to large hyperscalers: Backblaze is not the same scale or product breadth, but it does offer a differentiated low-cost storage niche that can be attractive to cost-sensitive AI workloads. Historically the stock has moved from under $4 in early 2026 to almost $24 in August, so the market is primed to reward execution that proves B2 is a sticky, high-volume business. The current price sits well below the 52-week high, leaving room to recapture former highs if execution continues.
Technical and market context
Technicals are mixed. Short-term moving averages (EMA9 ~ $17.13, EMA21 ~ $16.81) sit above the current price, suggesting the stock pulled back after a rally. RSI sits in the mid-40s and MACD indicates bearish momentum right now. Importantly, short volume has been elevated in recent sessions (for example, on 08/24 a large portion of volume was short), which means moves can be accentuated in either direction depending on news flow. That creates tradeable volatility for a disciplined entry and stop.
Catalysts to watch (2-5)
- CoreWeave partnership ramp - the announced $335M deal (08/05/2026) could meaningfully increase B2 AI storage demand if usage ramps as expected.
- Quarterly releases and guidance - continued beats and raised guidance will compress perceived execution risk and re-rate the multiple.
- Enterprise sales traction under new CRO - expanding larger customers and multi-year contracts would shift revenue mix toward recurring, higher-ticket deals.
- Margin progression - management commentary or results showing adjusted EBITDA and free cash flow improvement into H2 2026 as projected.
- Regulatory/class action noise resolution - clarity here would remove a headline risk that has weighed on the multiple in the past.
Trade plan (actionable)
Direction: Long
Entry price: $15.50
Target price: $22.00
Stop loss: $13.50
Horizon: mid term (45 trading days) — I expect the trade to play out over several weeks as enterprise demand evidence and further partnership details drive re-rating. If CoreWeave usage metrics or the next earnings report come in ahead of expectations, momentum could accelerate to the target. If results are mixed, stop exposure quickly at $13.50.
Rationale: Entry at $15.50 puts you slightly below the current trading level and leaves room for intra-day volatility. The stop at $13.50 limits downside to structural weakness in B2 demand or a broader tech drawdown. The target near $22.00 is a pragmatic reclaim toward prior highs and factors in continued strong execution plus a multiple expansion if revenue growth and margins trend up.
Risk management & position sizing
Given the stock's volatility and the company still being GAAP-negative, keep position sizing disciplined. A reasonable allocation is no more than a single-digit percent of a diversified portfolio for most retail investors. Trail the stop to protect gains if the position moves in your favor — consider moving the stop to break-even after a 15-20% move higher.
Risks and counterarguments
- Execution risk: The CoreWeave partnership is large on paper ($335M) but may take quarters to monetize. If adoption lags, revenue and margin improvements could disappoint.
- Concentration risk: A material portion of recent upside is tied to AI-related demand. If enterprise AI budgets cool, Backblaze’s premium multiple would be hard to defend.
- Legal/regulatory risk: Prior investigations and law-firm notices in mid-2025 created headline volatility. Renewed legal exposure or findings could compress multiples and hurt sentiment.
- Valuation sensitivity: At EV/Sales ~6.25x and price-to-free-cash-flow ~46.7x, the stock is priced for improving profitability. Any slowdown in margin improvement would make multiples look expensive quickly.
- Macro/market risk: A broad tech selloff or risk-off environment can overwhelm company-specific catalysts and push the stock below the proposed stop without company news.
Counterargument: Skeptics will say Backblaze is a commodity storage play with limited pricing power; larger cloud providers can undercut prices or bundle services, making it hard for Backblaze to scale margins meaningfully. If that materializes, re-rating back to single-digit EV/Sales is possible and my thesis would be weakened.
What would change my mind
I would abandon this long trade if any of the following occur: revenue growth slips back into single digits on a two-quarter basis, B2 growth cools materially below the recent pace (34% reported), or the CoreWeave partnership fails to produce measurable usage metrics within the next two quarters. Conversely, I would add to the position if management shows accelerating enterprise contract signings, longer-term commitments from large customers, and stronger-than-forecasted free cash flow conversion.
Bottom line: Backblaze is no longer just a backup vendor. If B2 becomes the durable, low-cost storage layer for AI and media workloads, the market will pay up. This trade treats that thesis as probable but not certain: enter at $15.50, protect at $13.50, and look for a move toward $22.00 over the next 45 trading days as the evidence base grows.
Key monitoring checklist
- Monthly/quarterly usage metrics tied to CoreWeave or other AI customers.
- Next quarterly revenue and B2 growth figures and any guidance changes.
- Progress on adjusted EBITDA and free cash flow targets.
- Any new enterprise contracts or customer logos from CRO initiatives.