Toast, Inc. surprise winner in software

What happened: Toast, Inc. (NYSE: TOST), a cloud-based restaurant management platform, has seen its stock decline by over 30% year-to-date. Despite this, the company continues to report strong revenue growth in the low 20% range and mid-20% growth in annual recurring revenue (ARR). BMO Capital initiated coverage on Toast with an 'Outperform' rating and a $35 price target, citing its recent market pullback as an attractive entry point. Toast's Q1 2026 earnings report showed revenue of $1.63 billion, matching Wall Street consensus, with management expressing confidence in the company's growth trajectory.

Market impact: The restaurant technology sector is affected, with investors reassessing Toast's valuation following its recent performance. Toast's strong fundamentals and positive analyst sentiment could drive a re-evaluation of the stock, potentially benefiting other players in the restaurant software space such as Lightspeed Commerce and Square.

What to watch next: Toast's Q2 2026 earnings report, scheduled for August 7, will provide insights into the company's growth momentum. Additionally, any updates on Toast's expansion plans and customer acquisition strategies will be crucial in determining the stock's trajectory. Technical levels around $25-$30 will be key resistance and support zones, respectively, as the stock attempts to stabilize after its recent decline.