3 Reasons to Hold BLZE Stock Now Despite a 56.8% Year-to-Date Rally

Core Insights - Backblaze (BLZE) has seen a significant year-to-date (YTD) increase of 56.8%, outperforming the Zacks Internet-Software industry and Zacks Computer and Technology sector, which returned 16.7% and 19.6% respectively [1] - The company is capitalizing on the AI revolution and executing its growth strategy effectively, leading to a critical decision for investors regarding holding positions or seeking better entry points [1] B2 Cloud Storage Growth - Backblaze's B2 Cloud Storage business is the main driver of its expansion, benefiting from increased enterprise adoption and demand for scalable, cost-efficient infrastructure for AI, media, and cybersecurity workloads [4][6] - The company anticipates B2 Cloud Storage revenue growth of 28% to 30% for Q3 2025, with a Zacks Consensus Estimate of $20.88 million, indicating a 29% year-over-year increase [5][8] - The focus on enterprise scale, predictable pricing, and AI-aligned product innovation strengthens B2 Cloud Storage as a durable and profitable growth engine [6] AI and Cybersecurity Integration - Backblaze is enhancing its market position by integrating AI and cybersecurity features into its cloud storage platform, capitalizing on the rising demand for scalable and secure infrastructure [7][9] - AI-related customers are increasingly contributing to enterprise revenues, diversifying growth and improving visibility across data-intensive use cases [9] - New cybersecurity features such as Anomaly Alerts and Enterprise Web Console enhance threat detection and compliance capabilities for enterprises [9] Competitive Landscape - Backblaze faces competition from Dropbox, Datadog, and Amazon, which are targeting overlapping enterprise workloads and expanding their service offerings [12] - Despite its transparent pricing and open-cloud design, competition from larger rivals may limit near-term market share gains [13] Valuation and Market Position - Backblaze's forward price-to-sales ratio stands at 3.27X, compared to 3.12X for Dropbox and 3.06X for Amazon, indicating a relatively high valuation [14] - The company holds a Zacks Value Score of F, suggesting that the stock may be overvalued following its substantial rally [14] - Continued growth in B2 Cloud Storage and strong demand for AI-related services could justify the current valuation, but investors may prefer to hold existing positions while waiting for more attractive entry points [14][16]