Key Points
Backblaze stock surged as much as 81% after the company reported better-than-expected Q1 2026 results.
The cloud storage specialist posted adjusted earnings of $0.04 per share, swinging from a loss in the year-ago quarter.
One strong quarter doesn't erase the concerns that tanked this stock last November.
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Shares of Backblaze (NASDAQ: BLZE) skyrocketed on Thursday, following the cloud storage specialist's impressive Q1 2026 earnings report. The stock peaked at 9:45 a.m. ET and backed down significantly from that top spot, but it still showed a 65% gain at 3:15 p.m. ET.
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AI demand drove Backblaze's earnings beat
The average Wall Street analyst expected breakeven earnings on sales near $37.8 million. Instead, Backblaze reported adjusted earnings of $0.04 per share (up from a $0.03 loss per share in the year-ago period) and top-line sales of $38.7 million.
Management highlighted strong demand from AI customers, as Backblaze's high-speed cloud storage is an effective data channel for AI training and generative AI operations.
"As AI models move from text to multimodal, incorporating video, audio, and images, the volume of data required to train and run those models grows by orders of magnitude," CEO Gleb Budman said on the earnings call. "This is not a future trend. It is happening now, and it is creating significant and growing need for storage that can handle it economically and at scale."
Don't pop the champagne just yet
Believe it or not, today's big jump didn't lift Backblaze's stock to record price levels. Share prices collapsed after the Q3 2025 report in November, dropping from $9.66 to $5.61 in three days. The company beat the Street targets in that report, but followed up with modest guidance for the end of fiscal year 2025.
So Thursday's move is more of a strong recovery than a victory march. Bearish analysts have accused the company of charging a premium for commodity storage, and insiders have been selling large amounts of stock since the fall of 2023.
Backblaze's leadership may have fixed the company's flaws, but it's hard to tell for sure from a single shareholder-friendly earnings report. If you're interested in this alternative play on the AI boom, I'd recommend keeping an eye on the next couple of financial updates. Backing up the proverbial truck without a firmer foundation would be a highly speculative move.
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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
