Backblaze (BLZE) Stock Forecast & Price Target

Backblaze has consistently achieved total revenue growth of at least 20% year-over-year (Y/Y) over the past five years, with management forecasting this growth to accelerate, reaching a minimum of 30% Y/Y by the fourth quarter of FY25 for its B2 cloud storage segment. The company is experiencing significant momentum, particularly in the artificial intelligence (AI) sector, evidenced by a 66% increase in AI customers Y/Y and a remarkable 25-fold growth in AI customer data in the first quarter of FY25. Additionally, the introduction of the B2 Overdrive offering, designed to support organizations with multi-petabyte storage requirements, positions Backblaze favorably to capitalize on the growing demand for AI, machine learning (ML), and high-performance computing (HPC) workloads.

Backblaze Inc. has continually reported a lack of profitability, along with historically negative free cash flow and earnings, raising concerns about its financial health. The Computer Backup service, which accounted for 48% of revenues in F1Q25, is projected to experience slowing growth into the single-digit range in subsequent years, indicating potential revenue stagnation. Additionally, significant depreciation costs linked to the company's extensive infrastructure have adversely affected GAAP gross margins, exacerbating the challenges the company faces in achieving sustainable profitability.