Aug 21 2026 03:47 AM EST

Backblaze Shares Rally on CoreWeave AI Storage Deal and Raised Guidance as Investors Reassess Growth Trajectory

Shares of Backblaze, Inc. (NASDAQ: BLZE) have climbed 288% over the past six months, propelled by the company’s largest-ever contract—a multi-exabyte AI storage agreement with CoreWeave—combined with accelerating B2 Cloud Storage revenue, margin expansion, and raised financial guidance. The deal and financial results have led investors to reassess the company’s positioning in the AI infrastructure supply chain and its prospects for sustained growth, though operational and legal risks remain under scrutiny.

The central catalyst for Backblaze’s share-price re-rating was the July 2026 announcement of a landmark $335 million multi-year storage contract with CoreWeave, a leading AI cloud infrastructure provider. The agreement, which includes warrants valued at $22 million, is the largest in company history and positions Backblaze as a strategic storage layer for AI workloads at scale. The deal contributed $319.5 million to remaining performance obligations in Q2 and is expected to ramp through mid-2027, boosting visibility into future revenue streams.

Financial results for the second quarter reinforced the positive narrative. Revenue rose 18% year-over-year to $42.7 million, exceeding guidance by $2.5 million. B2 Cloud Storage revenue—the core growth engine—expanded 34% year-over-year to $26.6 million, marking the fastest pace in seven quarters. Adjusted EBITDA reached $12.8 million for a 30% margin, up 1,200 basis points year-over-year, as revenue growth outpaced operating expenses. Annual recurring revenue climbed 21% to $177.3 million, while enterprise customers contributing more than $50,000 in ARR increased 57%.

CoreWeave Agreement Validates AI Storage Strategy

The CoreWeave contract is viewed by investors and analysts as a milestone that confirms Backblaze’s role in the AI infrastructure supply chain. The company’s B2 Neo and managed storage products are optimized for high-throughput, AI-native workloads, and the CoreWeave deal provides a reference win with a top-tier enterprise. The arrangement also introduces a capital-light managed storage model, with Backblaze running its software on customer-owned hardware, expanding its reach into regulated and sovereign cloud markets.

The surge in remaining performance obligations and raised full-year guidance have improved revenue visibility. Management now expects 2026 revenue of $172–$174 million, up from previous guidance of $161.5–$163.5 million, and adjusted EBITDA margin of 27–29%. Q3 revenue is forecast at $44.4–$44.8 million. Early indications point to B2 Cloud Storage revenue growth exceeding 40% year-over-year in 2027 as the CoreWeave ramp accelerates.

Enterprise Shift Drives Margin Expansion and Customer Growth

Backblaze’s go-to-market transformation has been central to its improved results. Over the past year, the company hired new sales leadership, expanded its developer ecosystem, and signed multiple large-scale contracts in the AI and neocloud space. Customers generating over $50,000 in ARR grew 57% year-over-year, with ARR from this cohort up 67%. Net revenue retention for B2 Cloud Storage stands at 113%, with total gross customer retention at 91%.

The company’s operational efficiency has improved, with adjusted EBITDA margin up 1,200 basis points year-over-year and revenue growth outpacing operating expense increases. Cash and marketable securities totaled $49.9 million at the end of June 2026, and capital lease lines have expanded to support infrastructure buildout for contracted demand.

Sector Tailwinds and Competitive Dynamics

Backblaze’s growth is occurring against a backdrop of strong secular tailwinds in AI-driven cloud storage. The global cloud infrastructure market is projected to reach $1.04 trillion in 2026, with AI workloads driving rapid expansion. Backblaze competes with hyperscalers such as AWS, Google Cloud, and Azure, as well as disruptors like Wasabi and DigitalOcean, differentiating itself through transparent pricing, low egress fees, and proprietary hardware.

The company’s valuation has risen, with a current price-to-sales ratio of ~3x, compared to peer averages near 2x. Analyst price targets have been raised sharply, with Oppenheimer setting a $25 target and Citizens at $16. Consensus sentiment is bullish on AI storage growth and improving profitability, though some caution on valuation risk if growth moderates.

Risks: Profitability, Legal Scrutiny and Competition

Despite improved adjusted profitability, Backblaze has not achieved GAAP profitability since its IPO and continues to report net losses. Capital intensity is expected to rise, with capex at 55–65% of revenue in the second half of 2026 and 2027 to support new contracts. Customer concentration, especially from large enterprise agreements, increases reliance on a few major clients.

Backblaze’s six-month rally reflects market confidence in its AI storage strategy, enterprise expansion, and improved profitability. Sustaining the momentum will depend on execution in large contracts, maintaining customer growth, and addressing operational, legal, and competitive risks. The upcoming investor day on September 9, 2026, is expected to provide further clarity on long-term targets and strategy.