Is TOST a good stock to buy? We came across a bullish thesis on Toast, Inc. on The Reservist’s Substack by Yehoshua Zlotogorski. In this article, we will summarize the bulls’ thesis on TOST. Toast, Inc.’s share was trading at $29.18 as of April 20th. TOST’s trailing and forward P/E were 52.11 and 22.27 respectively according to Yahoo Finance.
Toast, Inc. operates a cloud-based digital technology platform for the restaurant industry in the United States, Ireland, India, and internationally. TOST delivered a strong close to 2025, with Q4 results exceeding expectations across key metrics, including robust net location additions, strong EBITDA outperformance, and broad-based growth across its platform.
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While 2026 guidance implies a modest deceleration in subscription services and fintech gross profit growth alongside continued expansion in locations, management has a track record of conservatively guiding and subsequently outperforming, suggesting potential upside to current expectations despite a more uncertain macro backdrop.
Toast’s growth is driven by a combination of expanding restaurant locations, increasing average revenue per location through upselling software, payments, and financial products, and gradual expansion into new geographies and adjacent verticals. Its differentiated go-to-market strategy—anchored in a direct, on-the-ground salesforce—has enabled it to build a leadership position in the U.S. restaurant software market, with meaningful share gains across both SMB and enterprise segments. This positioning is reinforced by brand strength, word-of-mouth adoption, and continued product innovation, including AI-driven tools that enhance customer value and deepen platform integration.
Despite a seemingly crowded competitive landscape, Toast continues to outpace peers in net location growth, benefiting from a reinforcing flywheel of scale, product investment, and distribution. The company still has significant runway in its core U.S. market, supported by ongoing industry churn and underpenetration, while international expansion and adjacent category growth provide additional optionality.
Risks remain, including macro sensitivity tied to restaurant formation and survival rates, competitive pricing pressures, and slower international scaling due to its sales-intensive model. However, AI is more likely to enhance rather than disrupt Toast’s value proposition.
From a valuation perspective, Toast now trades at a more reasonable level relative to its growth. While current metrics imply a multi-year payback per location, sustained growth in locations and ARPL could significantly compress this over time, making the stock increasingly attractive. Assuming continued execution and improving operational efficiency, including lower stock-based compensation, the company offers a compelling long-term opportunity with favorable risk-reward dynamics.
Previously, we covered a bullish thesis on Toast, Inc. (TOST) by Nikhs in March 2025, which highlighted the company’s vertical integration, strong recovery, AI-driven innovation, and margin expansion. TOST’s stock price has depreciated by approximately 18.67% since our coverage due to slowing GPV (Gross Payment Volume) growth and rising operating expenses following the company’s strong prior-year rally. Yehoshua Zlotogorski shares a similar view but emphasizes on sustained location growth, ARPL expansion, and improving valuation dynamics.
Toast, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 68 hedge fund portfolios held TOST at the end of the fourth quarter which was 56 in the previous quarter. While we acknowledge the risk and potential of TOST as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TOST and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
