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Goldman upgrade boosts Toast as investors weigh AI growth into August earnings
The firm raised its Toast price target and cited Toast IQ’s impact on average revenue per user, even as AI-related hardware and memory costs could pressure margins ahead of August results.
Toast shares have surged into mid-July as Goldman Sachs upgraded the stock and highlighted growth potential from Toast IQ, the company’s AI platform launched in October 2025. The upgrade reflected Goldman’s view that Toast IQ could increase average revenue per user, supported by DCF modeling and an argument that the platform is also driving higher total revenue and annual recurring revenue (ARR).
Toast previously reported first-quarter results showing about 7,000 net new locations and 26.0% year-over-year ARR growth to $2.2 billion, figures that have helped fuel expectations around continued expansion. According to MarketBeat Ratings, Goldman Sachs also pointed to Toast’s rising number of accounts as a trend it expects to continue.
Heading into August earnings, analysts are debating valuation after the stock rally, with Toast trading about 20.0% below consensus price target levels cited in the coverage. MarketBeat Ratings also notes that while customers are using Toast IQ to seek insights that improve profitability and efficiency, Toast faces AI costs, including higher hardware and memory expenses that could put pressure on margins.
The same coverage ties investor expectations to the broader interest rate backdrop, noting that Toast’s stock performance has historically been sensitive to changes in rates given its exposure to the restaurant sector. It adds that restaurant operators have been managing higher input costs alongside consumer spending constraints, a dynamic that remains relevant for how demand and pricing could evolve into earnings.