Energy Efficient AI Infrastructure Programs Will Drive A Reassessment Of This Undervalued Opportunity

Catalysts

About Blaize Holdings

Blaize Holdings provides low power, programmable AI hardware and software platforms for hybrid AI infrastructure across cloud and edge environments.

What are the underlying business or industry changes driving this perspective?

• Large multi year AI infrastructure programs such as the Starshine collaboration and Yotta smart infrastructure rollout are already translating into contracted revenue visibility of approximately US$160 million over the next six quarters, which can support revenue growth and improve earnings predictability.
• As Blaize replaces third party GPUs with its own GSP cards in Starshine servers and ships Blaize only servers in other programs, the mix shift toward proprietary hardware and software is expected to support higher gross margins and a path toward improved net margins.
• Rising global investment in smart cities, public safety and sovereign AI infrastructure, especially in Asia and the Middle East, is feeding into contracts and partnerships such as TCC in Saudi Arabia and Reach Digital in the UAE, which can broaden the revenue base and support top line growth.
• The focus on energy efficient AI and the ability to operate at very high temperatures addresses increasing customer sensitivity to total cost of ownership and power usage, which can support higher adoption of Blaize servers and improve both revenue and gross profit per deployment.
• Development of next generation GSP silicon, funded in part by the US$30 million Polar investment and supported by existing software and orchestration layers, is intended to widen the range of workloads Blaize can serve, which can expand addressable revenue opportunities and support earnings over time.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Blaize Holdings's revenue will grow by 184.4% annually over the next 3 years.
• Analysts are not forecasting that Blaize Holdings will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Blaize Holdings's profit margin will increase from -1415.5% to the average US Semiconductor industry of 14.7% in 3 years.
• If Blaize Holdings's profit margin were to converge on the industry average, you could expect earnings to reach $50.3 million (and earnings per share of $0.37) by about January 2029, up from $-210.3 million today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 28.5x on those 2029 earnings, up from -1.1x today. This future PE is lower than the current PE for the US Semiconductor industry at 42.3x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 10.57%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• The company is still reporting losses, with a Q3 2025 net loss of $26.3 million and an adjusted EBITDA loss of $11.1 million. If revenue from contracts like Starshine, Yotta, TCC and Reach is delayed or does not scale as expected, cash burn could remain high and put pressure on funding, which would weigh on earnings and net margins.
• Q3 2025 gross margin of 15% compares to 59% in Q2 2025, and management is relying on a future mix shift from GPU heavy systems to Blaize GSP heavy servers to improve profitability. If customers do not adopt GSP only or GSP heavy configurations at scale, hardware costs could stay elevated and limit improvement in gross margin and operating leverage.
• A large part of near term visibility comes from a concentrated set of infrastructure programs, including approximately $160 million tied to Yotta and Starshine over roughly six quarters. Any project reprioritization, budget cuts or execution issues in smart city or sovereign AI rollouts could reduce contracted revenue and make earnings less predictable.
• The long term thesis depends on continued demand for energy efficient AI, hybrid architectures and operation in harsh, high temperature environments. If larger competitors replicate similar capabilities or customers standardize around alternative platforms, Blaize may face pricing pressure or slower win rates, which would be reflected in weaker revenue growth and constrained margins.
• Next generation chip development is expected to widen the range of workloads served and is being funded in part by external capital. Any delay, technical setback or higher than planned non recurring engineering and foundry costs could push out commercialization benefits and keep R&D and capitalized development spending high, which would weigh on earnings and free cash flow.

Valuation

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

• The analysts have a consensus price target of $7.8 for Blaize Holdings 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 $10.0, and the most bearish reporting a price target of just $6.0.
  
• In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be $341.8 million, earnings will come to $50.3 million, and it would be trading on a PE ratio of 28.5x, assuming you use a discount rate of 10.6%.
  
• Given the current share price of $2.09, the analyst price target of $7.8 is 73.2% 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.