Missed NVIDIA? Braze Might Be the Next AI Stock Breakout

Concerns about slowing growth and free cash flow volatility led analysts to trim 2025 targets, sending Braze’s (NASDAQ: BRZE) stock price to long-term lows, but that movement is over.

The AI-powered customer engagement platform has been firing on all cylinders, and its fiscal Q3 2026 results put the fears to rest.

While free cash flow (FCF) volatility may persist in upcoming quarters, the business is healthy, growing at an above-consensus pace, and margin improvements are forecasted for the subsequent fiscal year. The critical takeaway is that the Q3 release put an end to the analyst downdraft, catalyzing several reaffirmed ratings and price target increases that affirm the consensus forecast. 

The consensus forecast is substantial. The 23 analysts tracked by MarketBeat have a consensus price target of $46.50, representing approximately 30% upside from the critical pivot point. That aligns with the 150-week EMA and highs set earlier in 2025, a pivot that, when crossed, will lead to an accelerating rally. The market for BRZE stock could rise to match the consensus target within weeks, if not days, of crossing the EMA and then continue higher through the end of 2027.

The chart action is bullish. Braze’s stock price surged more than 15% following the Q3 release, confirming support at the bottom of a long-term trading range. The move puts the market within an easy leap of the critical resistance point, and the indicators are favorable. The stochastic and MACD combine to form a strong entry signal, with MACD indicating bullish momentum and the stochastic indicating a strengthening support base. 

Institutional and Analyst Activity Underpin Braze’s Rebound

Analyst sentiment remains robustly bullish, with a consensus Moderate Buy rating. 21 of the 23 ratings are a Buy, and many of the fresh targets point to an above-consensus price point. 

Institutional activity is also bullish, with the group owning about 90% of the stock and buying aggressively in 2025. The data tracked by MarketBeat reveals that institutions have been buying on balance each quarter of the year, with the activity ramping to a three-quarter high in early Q4, as they accumulate the stock.

Short interest is a factor in the post-Q3 release stock price rally, but not the primary driver. At approximately 6%, it is enough to assist with the updraft but insufficient for a substantial short-covering rally.

With this in play, investors can assume that institutional, fund manager, and retail investor activity is at work and the rally is sustainable. The risk is that price action will consolidate at or near its post-release peak, potentially pulling back to retest support before advancing to new highs. 

Accelerating AI Adoption Strengthens Braze Customer Engagement Business

Braze, Inc. had a strong quarter, with revenue rising by 25.5% and outpacing MarketBeat’s reported consensus by 360 basis points.

The strength was driven by renewals, service penetration, and new clients, with large clients underpinning the growth. Large clients, those contributing more than $500,000 in annual recurring revenue, grew by nearly 29%. The company’s primary segment was also solid, with subscriptions accounting for 95% of the quarterly revenue. Net service retention increased by 108% and is expected to remain expansionary in the upcoming quarters. 

The margin news is also good. The company continues to post GAAP losses, but much of the weakness is non-cash in nature, and losses are improving. The critical takeaways include improved adjusted results: a greater than 100% increase in operating income, a doubling of cash flow, and $17.8 million in free cash flow, compared to cash burn in the prior year’s quarter.

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The article "Missed NVIDIA? Braze Might Be the Next AI Stock Breakout" first appeared on MarketBeat.