A $335M CoreWeave Contract Sends Backblaze to a New High

The setup The AI trade is finally rotating from raw compute to the adjacent layers that actually make it work. Tuesday's session saw capital rush into software and storage providers that can prove they are monetising the infrastructure buildout, setting up sharp moves for names that have secured their piece of the pie.

What's moving

Palantir proves the enterprise software case Palantir jumped after a strong quarter revealed U.S. commercial revenue grew nearly 150% (per CNBC Technology). CEO Alex Karp noted customers are actively adopting its sovereign tools rather than becoming "vassal states of the language labs" (per CNBC Technology), signalling that enterprises are finally paying for applied AI software.

The physical grid hits its limit The data center buildout is straining the power grid. The PJM Interconnection filed a backstop capacity auction plan to address a shortfall that could reach 70 GW by 2038 (per Utility Dive). Meanwhile, Caterpillar shares rallied on a record earnings beat driven specifically by data center construction demand (per MarketWatch Top Stories).

Frontier labs face mounting friction OpenAI and Anthropic are catching regulatory heat on multiple fronts. The European Commission is flexing new AI Act powers to inspect models and potentially fine providers up to 3% of their turnover (per CNBC Technology). Across the Atlantic, OpenAI dragged its trade secret dispute with Apple into a public blog post to defend against claims of stolen confidential data (per The Verge).

Featured: Backblaze ($BLZE)

The move Backblaze closed Tuesday up +46.22% at $22.80, sitting exactly on its 52-week high. The jump was traded on 1.1x its normal 30-day volume. This extends a prolonged run for the cloud platform: the stock is now up +381.4% year-to-date and trades +232.2% above its 200-day moving average.

What drove it The catalyst was Tuesday's earnings report, detailed in an 8-K filed 18 hours ago, and an earnings call where the company announced a record $335 million deal with AI cloud provider CoreWeave. The company also reported +34% growth in its B2 cloud storage division, its primary enterprise service that enables developers to build applications and manage cloud data. Securing a nine-figure contract with the primary alternative GPU provider changes the math on Backblaze's forward revenue predictability. Wall Street responded aggressively to the print, though the street's average price target of $15.17 is now 33.5% below where the stock actually trades.

The bigger picture We are watching the AI infrastructure cycle widen. By our dashboard, the AI Infrastructure CapEx phase registers as a slowdown, with hyperscaler aggregate capex running 25.6% above last year. This indicates that the initial frenzied buying of primary compute might be cresting. But all those accelerators generate vast amounts of data that must be stored, retrieved, and managed.

Storage is a classic trailing indicator in a compute cycle. You buy the processors first, run the models, and then realise you need somewhere to put the output. Backblaze, which built its business on commodity hardware and aggressive pricing, is perfectly positioned to catch the runoff from companies that cannot afford premium storage tiers for their heavy AI workloads. The CoreWeave partnership formally connects this legacy backup provider to the frontier of the AI boom, proving that the second layer of the infrastructure trade is now underway.

Across the tape

Tuesday was a deeply risk-on session for technology. The semiconductor ETF ($SMH) gained +4.08% and the software ETF ($IGV) climbed +3.59%, outpacing the Nasdaq Composite's +1.58% rise.

Palantir ($PLTR) was the day's headline large-cap winner, jumping +23.71%. The optical networking trade also caught a heavy bid, with Applied Optoelectronics ($AAOI) up +16.92% and Marvell ($MRVL) climbing +10.32%, confirming that the plumbing of AI data centers remains in high demand across the board.

Under the hood, the macro picture was mixed. Oil took a hit, falling -5.13% to $76.22, while gold futures gained +2.63%. The 10-year Treasury yield slipped to 4.64%, providing a supportive backdrop for high-multiple software valuations.

What to watch

• Backblaze's float: With the stock up nearly 400% this year and a fresh S-3 registration statement filed 17 hours ago, watch for secondary offerings as the company looks to capitalise on its elevated valuation.
• SpaceX's first print: Following a post-IPO selloff, Elon Musk's space venture faces its first public earnings report (per CNBC Technology). Watch for satellite internet subscriber growth and margin commentary.
• The July jobs report: Kalshi traders are pricing in a nearly 50-50 chance that the U.S. economy added more than 80,000 jobs in July, betting on a cooler print than economists expect (per CNBC Finance).