Backblaze Inc. (NASDAQ: BLZE) saw its stock price surge nearly 40% in Tuesday afternoon trading after the cloud-storage company announced a significant multi-year storage agreement with CoreWeave, a leading AI cloud platform. The deal, with an estimated contract value of approximately $335 million, marks a major leap for Backblaze into the AI infrastructure space, positioning it against much larger competitors.
Deal Details and Market Reaction
The agreement, which took effect on June 16, 2026, involves Backblaze providing multi-exabyte storage capacity to CoreWeave. An exabyte is equivalent to one billion gigabytes. The storage will support CoreWeave’s managed infrastructure and its HDD-based storage tiers within CoreWeave AI Object Storage. Hard-disk drives (HDDs) offer lower cost but slower speeds compared to solid-state drives (SSDs), making them suitable for large-scale, less latency-sensitive AI workloads.
Backblaze shares soared 39.8% to $11.35, reaching an intraday high of $11.37, with approximately 26.5 million shares changing hands. For context, the iShares Russell 2000 ETF slipped 0.5%, and the Invesco QQQ Trust, tracking the Nasdaq-100, dropped 2.7% during the same period.
Financial Impact and Risks
The deal's estimated value of $335 million is more than double Backblaze's annual recurring revenue (ARR) of $158.2 million as of the end of the first quarter. The company's B2 Cloud Storage revenue grew 24% year-over-year in Q1, outperforming its computer-backup segment. However, the final revenue from this agreement will depend on actual storage usage, and Backblaze has granted CoreWeave warrants to purchase up to 4.2 million shares at $7.60 each, which could dilute existing shareholders if exercised.
Backblaze CEO Gleb Budman emphasized the importance of storage in AI workflows, stating, "Storage is the foundation every AI workflow is built on." CoreWeave VP Nick Hoover praised Backblaze's HDD infrastructure as "reliable and easy-to-consume at scale."
Competitive Landscape
Backblaze operates in a highly competitive market, facing off against giants like Amazon Web Services, Google Cloud Platform, and Microsoft Azure. In its annual report, the company acknowledges that these rivals have stronger brands, broader product lines, and greater resources. This deal, however, provides Backblaze with a significant AI-infrastructure boost and a foothold in the rapidly growing AI storage market.
CoreWeave shares slipped 3.3% on Tuesday. The company reported Q1 revenue of $2.08 billion, more than double the prior year, and a revenue backlog nearing $100 billion. CEO Michael Intrator called it CoreWeave's "strongest bookings quarter."
Outlook and Risks
While the agreement is a positive development for Backblaze, it does not guarantee revenue, as payouts depend on storage consumption. The warrants also pose a dilution risk. Moreover, the AI storage market is still evolving, and large platforms or hardware firms could capture most of the profits. Nevertheless, the deal underscores the growing demand for storage infrastructure to support AI workloads.
Investors should note that this information does not constitute investment advice. All investments carry risk, including the potential loss of principal. Readers are encouraged to conduct their own due diligence before making any investment decisions.
