Jim Cramer used a recent Mad Money segment to dissect a small-cap cloud storage name that most generalist investors have never opened a tab for. His takeaway on Backblaze (NASDAQ:BLZE): a real business with a real AI angle, just not the right moment to step in. I have been watching the cloud infrastructure space for years now, and the tension Cramer flagged here is exactly what can fundamentals-first investors.
What Cramer Actually Said About Backblaze
Backblaze is a San Mateo-based cloud storage platform, and Cramer zeroed in on where the growth actually lives. “It’s not the mature, slow growing computer backup business. It’s the cloud data storage division. This is an enterprise grade object storage platform. It’s a legitimate alternative to amazon’s s3 storage service, and it’s increasingly tied to AI workloads,” he said.
His bull case rests on a few numbers he cited on air: the cloud storage division grew 24% in the latest quarter and now represents 57% of total revenue, AI customer count was up 76% year over year and accounted for over one third of new bookings, and ARR from large customers climbed 72% year over year. That tracks with what management has been telling investors. CEO Gleb Budman said “Backblaze is emerging as a compelling storage platform of choice for the AI economy” on the Q1 call.
The Numbers Behind the Story
The Q1 FY2026 report, filed with the SEC on May 4, 2026, was a beat-and-raise. Revenue came in at $38.67 million, beating expectations by roughly 2%, with adjusted EPS of $0.04 against a breakeven estimate. Management lifted full-year guidance to $161.5 million to $163.5 million in revenue. Cramer noted management expects full-year revenue over $160 million with positive EBITDA.
The reaction was violent. The stock surged about 55% on May 5, 2026 after the print. As of June 10, 2026, shares trade at $7.40, up roughly 59% year to date. The market cap sits at $452.5 million, with shares 14% below the 52-week high of $10.86.
Why Cramer Says the Timing Is Off
Cramer then flagged the caution. Cramer flagged a cost problem nobody talks enough about: “Equipment costs are up about 30% per year, year over year… driven by component shortages and shift to faster flash storage and solid state drives for AI workloads.” Selling AI-grade storage is great until the gear to deliver it eats your margin.
He also reminded viewers that the legacy half of the business is in run-off. “The legacy computer backup business… It’s durable, but it’s not growing. In fact, it’s expected to gradually decline over the next two years,” Cramer said. Computer Backup revenue was already down 2% year over year in Q1.
On valuation, Cramer landed here: “Backblaze currently sells for about three times sales and 50 times next year’s earnings estimates. That’s not terribly expensive, but it’s certainly not cheap and compelling either. My biggest worry here… It’s timing. Everybody’s selling anything connected to the AI complex in order to raise money to participate in the space.” The forward P/E of 85 and price-to-sales ratio of 3x roughly match his math.
How to Think About It
The Street is split. The consensus analyst price target sits at $9.34, with two strong buys, four buys, one hold, and one strong sell. Beta runs hot at 1.72, so the swings between the 52-week low of $3.26 and recent highs make sense for a name this small.
Cramer closed with this: “Backblaze is a real company with a real business. Solid revenues, big customers, improving financials. But the bottom line backblaze lacks the explosive growth of the hottest AI names… Solid company, just not the right time.” If you believe AI workloads keep pulling object storage out of the hyperscaler garden, the long-term setup is interesting. If you believe small-cap AI infrastructure names get sold every time a megadeal headline hits the tape, Cramer’s pin is the more useful tool than a buy ticket.
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