Track market-moving stories before they get noisy

Key Takeaways Toast launched an AI marketing agent to help restaurants create campaigns and attract more guests.Pilot users of Toast IQ Grow saw average sales rise 8% versus similar Toast restaurants.Toast's AI push lifted coding velocity 60% and resolved 40% of customer-support interactions. Toast, Inc. (TOST - Free Report) is making artificial intelligence (AI) a central part of its growth strategy. In May 2026, the company launched Toast IQ Grow, a marketing product built around its first AI agent. It creates campaigns using restaurant sales data across email, text messages and social channels, helping busy operators save time and attract guests.

Early results appear encouraging. Pilot customers using Toast IQ Grow recorded an average 8% increase in sales compared with similar Toast restaurants. Sahara Bistro Shawarma attributed nearly one-third of its March 2026 sales to Toast marketing tools. Its sales also rose more than 30% from the prior four weeks, suggesting that AI agents can produce measurable returns.

Toast also has a large base for expanding AI services. It ended the first quarter of 2026 with about 171,000 locations, up 22% year over year, after adding roughly 7,000 net locations. Toast IQ already had 40,000 weekly active locations, giving the platform more operating, payment and guest data to generate useful recommendations.

The AI push is also supporting Toast’s internal efficiency. Engineering coding velocity increased more than 60% year over year, helping the company launch its marketing agent three months earlier than planned. About 40% of customer-support interactions were resolved by AI, improving efficiency and enabling Toast to invest more in account management, product development and sales.

Investors need to watch whether AI usage is converting into stronger financial growth. First-quarter 2026 annualized recurring run-rate (ARR) rose 26% to $2.2 billion, while recurring gross profit grew 27%. Adjusted EBITDA reached $179 million, and operating income climbed to $110 million from $43 million.

How Are XYZ & LSPD Integrating AI?Block’s (XYZ - Free Report) Square has embedded AI into its merchant services through automated marketing, customer insights and operational recommendations. These tools help restaurants personalize promotions, simplify decisions and improve efficiency within the broader Square ecosystem. XYZ reported serving more than 4 million sellers across its global digital commerce platforms.

Lightspeed (LSPD - Free Report) applies AI to restaurant analytics, inventory planning and customer engagement. Its AI-driven features help operators interpret sales patterns, forecast demand and identify practical actions that may improve margins. LSPD ended the fourth quarter of fiscal 2026 with approximately 150,000 total customer locations using its commerce platform worldwide.

TOST’s Price Performance, Valuation & EstimatesShares of Toast have outperformed in the past three months compared with the broader industry.

Image Source: Zacks Investment Research

From a valuation standpoint, Toast’s shares have a Value Score of C. In terms of forward 12-month P/E, TOST stock is trading at 26.20X, which is at a discount to the Zacks Internet Software industry’s 27.43X.

Image Source: Zacks Investment Research

Toast’s estimate revisions reflect a positive trend. The Zacks Consensus Estimate for full-year 2026 earnings per share has been revised upward to $1.35 in the past two months. The consensus estimate for the metric indicates a year-over-year increase of 51.69%.

Image Source: Zacks Investment Research

Toast currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Toast Inc. NYSE: TOST shares have rallied sharply into mid-July. Analysts are becoming bullish on the company’s Toast IQ artificial intelligence (AI) platform that launched in October 2025.

Toast Today

$30.56 +0.16 (+0.54%)

As of 01:41 PM Eastern

This is a fair market value price provided by Massive. Learn more.

52-Week Range$22.26▼

$49.66P/E Ratio47.03

Price Target$37.59

The tool is boosting total revenue and annual recurring revenue (ARR). Toast’s first-quarter results showed approximately 7,000 net new locations and 26% year-over-year ARR growth to $2.2 billion.

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That was punctuated by The Goldman Sachs Group, which upgraded the stock from Neutral to Buy and raised its price target to $36. The firm was bullish about Toast IQ, which it believes will increase the company’s average revenue per user. Toast has also been increasing its number of accounts, a trend Goldman Sachs believes will continue.

Since the rally, TOST is about 20% below its consensus price target of $37.59. But at a time when investors have higher growth options, the simple question is whether TOST is fairly priced or undervalued.

Toast AI Platform Is Driving Revenue and ARR GrowthOn June 10, Toast published data about how its customers used Toast IQ in the first quarter of 2026. The results make clear that restaurant owners are looking for insights to increase the profitability and efficiency of their restaurants. That supports the idea that revenue gains will continue.

However, the company is also facing the costs associated with AI. That means balancing higher hardware and memory costs that could put margins under pressure.

Why Interest Rates Still Matter for TOSTSince going public in 2021, TOST stock has been impacted by the direction of interest rates. It soared to around $51 a share after the IPO. However, this was a time when stimulus money flowed freely, and the revenge travel trade was just getting started.

Toast seemed like the right stock at the right time. That is, until it wasn’t. TOST fell sharply, along with most technology stocks, starting in November 2021.

That wasn’t just because of normal IPO price action. The Federal Reserve began raising interest rates from a level at or near zero percent. Before dismissing that as anecdotal evidence, consider that Toast relies on the restaurant sector. This sector came under pressure as they balanced higher input costs with a consumer who had only so much room to absorb price increases.

That situation is still in place today. Consumer spending remains strong, and the latest data show inflation moderating. That argues against interest rate hikes, which will be bullish for TOST.

Is Toast Stock Undervalued? DCF Models Tell Different StoriesA discounted cash flow (DCF) calculator offers two ways to answer the fair value question. At TOST's current price, both are worth checking because they tell noticeably different stories.

The Intrinsic Value (FCF) model discounts Toast's projected free cash flow to today's dollars, resulting in a fair value range of $35.68 to $65.40 per share. The high end of that range is about 54% above the price as of July 15, suggesting the stock is undervalued on a pure cash-generation basis.

The Intrinsic Value Range w/Earnings Per Share (EPS) model applies multiples of 18.75x to 25x to projected earnings, resulting in a fair value band of $4.59 to $8.37 per share. A 25x forward price-to-earnings (P/E) is below the stock's current P/E and is reasonably generous for a mature company. The gap comes from the earnings base, not the multiple.

Why the disconnect? Toast only recently crossed into sustained GAAP profitability, and its GAAP earnings per share remain small relative to the cash the business actually generates. Stock-based compensation and other non-cash charges weigh on reported EPS in a way that they don't weigh on free cash flow. Analysts project 33% earnings growth over the next 12 months. A static, current-year EPS multiple doesn't fully capture that growth.

That's the real takeaway: the FCF and EPS models aren't contradicting each other so much as measuring different things for a company early in its profitability curve. As GAAP earnings catch up to cash flow, expect that gap to narrow. Until then, the FCF model may be the more reliable gauge of what Toast is actually worth.

Toast, Inc. (TOST) Price Chart for Thursday, July, 16, 2026

Toast Stock Outlook: What to Watch Before August EarningsTOST is a stock that may be easier to buy than it is to hold. For investors who believe the stock is trading below its fair value, getting in at $30 seems like a safe bet. However, competition and higher costs could eat into the company’s margins, compressing earnings growth, which is the argument skeptics are making.

Toast is scheduled to report earnings on August 4. Confirmation of strong year-over-year revenue growth could go a long way toward affirming Goldman Sachs' outlook. It could also signal that more analysts will raise their TOST targets.

Should You Invest $1,000 in Toast Right Now?Before you consider Toast, you'll want to hear this.

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