Braze: The Overlooked AI-Powered Customer Engagement Platform Poised for a Breakout in 2026

In the rapidly evolving landscape of customer engagement, Braze (NASDAQ:BRZE) has emerged as a quiet innovator, leveraging artificial intelligence to redefine how brands interact with consumers. While its stock price has faced recent volatility, a closer examination of its fundamentals, valuation metrics, and AI-driven growth strategy reveals a compelling case for a re-rating in 2026.

Valuation Discrepancies: DCF vs. PS Ratios

Braze's valuation appears to straddle two narratives. Discounted cash flow (DCF) analyses consistently suggest the stock is overvalued by 11.7% to 19.4%, with intrinsic values ranging from $24.91 to $25.66 per share according to DCF analyses. However, its price-to-sales (P/S) ratio of 4.81x to 5.21x aligns closely with its estimated fair value range of 4.80x to 5.16x according to market data. This discrepancy highlights a critical insight: DCF models may be underestimating Braze's future cash flow potential, particularly as its AI-driven solutions gain traction. The PS ratio, meanwhile, reflects a more neutral stance, suggesting the market is neither overpaying nor undervaluing the stock based on current revenue multiples.

AI-Driven Fundamentals: A Catalyst for Growth

Braze's Q3 2025 results underscore its AI-powered momentum. Revenue surged 25.5% year-on-year to $190.8 million, exceeding analyst estimates by 3.6%. This growth is fueled by its AI Decisioning Studio and Agent Console, which enable clients to deploy hyper-personalized campaigns at scale. For instance, Braze's customer base grew 14% to 2,528, while high-spending clients (those with over $500,000 in annual spend) increased by 29% to 303 according to Q3 data. The CEO emphasized that Braze's platform is empowering marketers to transcend single-channel strategies, using dynamic data to build deeper customer relationships.

Looking ahead, Braze raised its full-year revenue guidance to $730.5–731.5 million, driven by AI product monetization and vertical market expansion. Analysts have responded positively, with a $44.83 price target and a "Buy" rating according to Gurufocus analysis, reflecting confidence in the company's ability to capitalize on AI trends.

Broader AI Trends: A Tailwind for Customer Engagement

Braze's growth is not occurring in a vacuum. The customer engagement sector is undergoing a seismic shift as AI becomes a cornerstone of brand strategy. Over 80% of companies now use AI to enhance customer experiences, while 87% of organizations leveraging AI-driven personalization report measurable gains in engagement. Key trends include:
- Conversational AI: Gartner predicts a 30% increase in conversational AI adoption by 2025, with tools evolving from chatbots to empathetic, autonomous agents according to industry reports.
- Predictive Scoring: AI is enabling real-time segmentation and personalization, allowing brands to anticipate customer needs according to G2 research.
- Journey Orchestration: AI-powered tools now suggest optimal next steps for customer interactions, streamlining workflows according to G2 research.

Braze is at the forefront of these trends. Its BrazeAI Decisioning Studio™ uses reinforcement learning to optimize campaigns in real time, while the BrazeAI Agent Console™ allows marketers to deploy AI agents seamlessly according to company announcements. These innovations position Braze to capture a growing share of the AI-driven customer engagement market, which is projected to expand rapidly as brands prioritize personalization.

Valuation Re-Rating Thesis: Bridging the Gap

The disconnect between Braze's DCF valuation and its PS ratio stems from the market's underappreciation of its AI-driven growth potential. While DCF models rely on historical cash flow assumptions, Braze's AI tools are creating a flywheel effect: enhanced personalization drives customer retention, which in turn boosts revenue and margins. For example, its AI-powered solutions have already demonstrated a 29% increase in high-spending clients, a metric that traditional DCF models may not fully capture.

Moreover, the broader AI tailwinds in customer engagement are likely to accelerate Braze's monetization. As 61% of American adults adopt AI tools, and brands increasingly prioritize empathy-driven AI, Braze's platform is uniquely positioned to benefit. Analysts' $44.83 price target implies a 70% upside from its current valuation, suggesting the market could re-rate the stock as AI adoption scales.

Conclusion: A Breakout Candidate in 2026

Braze's combination of AI-driven innovation, strong fundamentals, and alignment with industry trends makes it a compelling candidate for a valuation re-rating in 2026. While DCF models currently suggest overvaluation, the PS ratio and analyst sentiment indicate the market is beginning to recognize its potential. As AI reshapes customer engagement, Braze's leadership in agentic AI and real-time personalization could drive both revenue growth and margin expansion, bridging the gap between intrinsic value and market price. For investors, this represents a rare opportunity to invest in a company poised to redefine its sector.