Braze

BRZE

Market cap $2.45B

Large tech companies are planning to spend vast sums on AI infrastructure. One of the largest revealed that its 2027 capex will be substantially higher, chiefly for this reason.

Investors interested in stocks from the Internet - Software sector have probably already heard of BILL Holdings (BILL) and Braze, Inc. (BRZE). But which of these two companies is the best option for those looking for undervalued stocks?

Braze shares jumped 7.5% after Goldman Sachs initiated coverage on Wednesday. Braze posted 30% year-over-year revenue growth and record free cash flow last quarter.

Braze remains a compelling "Buy" despite a ~40% YTD decline, as the company delivers robust growth amid macro headwinds. BRZE defies weaker consumer spending and shrinking marketing budgets, maintaining strong customer engagement platform demand. Software sector weakness is driven by capital rotation into AI infrastructure, but I expect economic value to shift back to software applications.

Watch more: Winning the Next Transaction: How AI Helps Build Loyalty in Payments Loyalty used to be a relatively simple fight for spend primacy. Issuers wanted the card at the front of the wallet, then the default credential on file.

The pullback has been partly tied to fears that artificial intelligence (AI) could disrupt customer engagement software providers. But Braze's latest earnings release indicate a rebound underpinned by strength in clients, penetration, and cash flow, suggesting AI is becoming a demand driver rather than just a competitive threat.

Investors looking for stocks in the Internet - Software sector might want to consider either StoneCo Ltd. (STNE) or Braze, Inc. (BRZE).

Braze beat Wall Street's sales target for the first quarter, and earnings per share were in line with the average forecast. The company also raised its full-year sales outlook, but the business is seeing some declines for margins.

U.S. stock futures were lower this morning, with the Dow futures falling around 0.1% on Thursday.

Braze, Inc. (BRZE) Q1 2027 Earnings Call Transcript