Last Update 09 Jan 26

BRZE: Gen AI Pilots And 2026 Budgets Will Drive Top Pick Upside

Analysts keep their fair value estimate for Braze steady at US$46.70. This highlights ongoing confidence in its role within customer engagement software and expected monetization of Gen AI features based on recent research and customer feedback.

Analyst Commentary

Bullish Takeaways

Bullish analysts view Braze's role in customer engagement and marketing software as well placed to capture demand for Gen AI features, which they see as an important driver for software budgets over time.
The shift of a conviction rating and a US$50 price target onto Braze signals confidence in the company’s execution and product positioning relative to larger peers in application software.
Feedback from over 50 recent customer conversations points to active pilot and proof of concept activity around AI driven use cases, which bullish analysts see as early validation of Braze's value proposition.
Expectations that current testing cycles could align with future budget appropriations in 2026 underpin the view that Braze may have a pipeline of demand that supports the current fair value estimate.

Bearish Takeaways

Bearish analysts may point out that much of the AI related customer activity is still in pilot or proof of concept stages, which can introduce uncertainty around the timing and scale of paid deployments.
The reliance on expected new budgets in 2026 means there is a timing gap between current enthusiasm and potential revenue realization, which could create periods where execution appears uneven.
With Braze positioned as a key name within customer engagement software, expectations embedded in conviction style ratings and fair value estimates could be hard to meet if adoption of Gen AI features proceeds more slowly than current customer feedback suggests.
Any delay or change in enterprise software spending priorities, including how quickly companies approve incremental AI related budgets, could challenge the assumptions that underpin bullish views on Braze's growth and monetization path.

What's in the News

Braze issued revenue guidance for the fiscal fourth quarter ending January 31, 2026, projecting US$197.5 million to US$198.5 million in revenue, giving a sense of the scale management is planning for in the near term. (Corporate Guidance)
For the fiscal year ending January 31, 2026, Braze guided to revenue of US$730.5 million to US$731.5 million, which frames the company’s full-year outlook that analysts can plug into their models. (Corporate Guidance)
Braze announced that BrazeAI Decisioning Studio is now available on Google Cloud Marketplace, making it easier for customers who already use Google Cloud to procure and deploy Braze’s AI decisioning tools within their existing environments. (Client Announcements)
BrazeAI Decisioning Studio, presented at the Forge 2025 conference, is described as using reinforcement learning and first-party data to personalize customer communication across channel, content, offers, timing, and frequency, with an emphasis on measurable ROI and insights for enterprises. (Client Announcements)

Valuation Changes

Fair Value Estimate, unchanged at US$46.70 per share, indicating that the updated inputs did not alter the headline valuation output.
Discount Rate, eased slightly from 8.50% to 8.49%, a very small adjustment that has only a marginal effect on the model.
Revenue Growth, kept effectively the same at about 17.54%, showing no change in the growth assumption used in the valuation framework.
Net Profit Margin, trimmed from about 12.75% to about 12.35%, reflecting a slightly more conservative view on future profitability in the model.
Future P/E, nudged up from about 56.9x to about 58.8x, representing a modestly higher valuation multiple applied to forward earnings within the analysis.

Braze's strategic acquisitions and AI enhancements are poised to boost revenue growth and market differentiation, improving earnings and net margins.
Geographic and vertical diversification, alongside large customer additions, promise strong revenue growth and better operating margins across various global industries.
OfferFit integration challenges and evolving data laws could impact Braze's net margins and scalability, while partner pricing dynamics threaten revenue stability.

Catalysts

About Braze

Operates a customer engagement platform that provides interactions between consumers and brands worldwide.What are the underlying business or industry changes driving this perspective?

Braze's acquisition of OfferFit is expected to enhance AI-driven optimization capabilities and lead to revenue growth through deal size expansion and differentiation in the market. This investment should drive better earnings and net margins as OfferFit's sophisticated AI solutions integrate into Braze's platform.
The increasing trend of legacy vendor replacement and vendor consolidation creates opportunities for Braze to capture more market share, leading to revenue expansion as brands upgrade to modern customer engagement strategies.
Braze's expansion of its Shopify integration and e-commerce capabilities should lead to higher engagement and conversion rates for customers, potentially boosting revenue through increased adoption in the retail and consumer goods verticals, which accounts for a significant portion of Braze's business.
Project Catalyst and new offerings such as Agentic AI promise better personalization and customer engagement, which can drive incremental revenue and improve net margins through the increased effectiveness and efficiency of marketing campaigns.
Continued geographic and vertical diversification, as well as strong large customer additions, are likely to drive robust revenue growth and improved operating margins as Braze expands its presence in industries like fintech, retail, energy, and telecommunications globally.

Braze Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Braze's revenue will grow by 17.9% annually over the next 3 years.
Analysts are not forecasting that Braze will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Braze's profit margin will increase from -16.8% to the average US Software industry of 13.1% in 3 years.
If Braze's profit margin were to converge on the industry average, you could expect earnings to reach $133.0 million (and earnings per share of $1.11) by about September 2028, up from $-103.9 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 50.4x on those 2028 earnings, up from -28.8x today. This future PE is greater than the current PE for the US Software industry at 36.6x.
Analysts expect the number of shares outstanding to grow by 2.81% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.49%, as per the Simply Wall St company report.

Braze Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The integration of OfferFit into Braze is expected to be modestly dilutive to non-GAAP operating income margins in the fiscal year, potentially impacting the company's net margins.
Braze's reliance on ongoing high-performance marketing engagements and value selling, while beneficial, also suggests a dependency on sophisticated client setups which might limit scalability and revenue growth if not executed well.
Concerns around evolving international data sovereignty laws and data center expansions could lead to increased operational costs and impact future net margins.
Any misalignment or delays in integrating OfferFit's technology with Braze’s platform could result in unexpected costs and disruptions, affecting both net margins and earnings.
The dynamic pricing and evolving strategies of partners like Meta, especially regarding quickly changing messaging channels, pose a risk to predictable revenue streams and might impact both short and longer-term earnings stability.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $43.722 for Braze based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $68.0, and the most bearish reporting a price target of just $35.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.0 billion, earnings will come to $133.0 million, and it would be trading on a PE ratio of 50.4x, assuming you use a discount rate of 8.5%.
Given the current share price of $26.99, the analyst price target of $43.72 is 38.3% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

OfferFit Integration And Shopify Expansion Will Open New Markets