Simply Wall St
4 min read
BlackBerry (TSX:BB) is back in focus after an equity analyst initiated coverage with a positive recommendation, citing QNX software demand and broader physical AI adoption as key themes for the business.
Recent trading has been choppy. The share price has climbed 19.0% over the past month but declined 18.3% across the last quarter, while the year-to-date share price return of 143.5% and 1-year total shareholder return of 102.4% point to strong momentum building around BlackBerry.
Scan how other software and AI plays are reacting to this same physical AI theme with a curated list of 92 AI infrastructure stocks.
BlackBerry has already delivered a very large year-to-date run, yet the current price still sits close to intrinsic value estimates and the fresh analyst target. Is most of the easy upside gone, or is this just the first leg?
Most Popular Narrative: 21.6% Undervalued
According to the most widely followed narrative, BlackBerry’s estimated fair value of CA$16.22 sits well above the last close at CA$12.71, which frames the recent surge as only part of the story rather than the whole move.
A $200M bet made for entirely the wrong reasons, on what looked like a car stereo OS acquired from a speaker company, has become an 83%-gross-margin royalty machine embedded in 275 million vehicles, with a $950M contracted backlog, and a Nvidia partnership positioning it as the safety infrastructure layer that physical AI cannot be commercially deployed without. The market mispriced it for a decade because everyone remembered it as a dead phone company. It turns out the best investments are sometimes the ones nobody planned.
See why 23 investors see BlackBerry as 22% undervalued.
Result: Fair Value of CA$16.22 (UNDERVALUED)
Still, the BlackBerry story can break if physical AI royalties arrive slower than expected, or if major automakers push harder into fully in-house safety software.
Find out about the key risks to this BlackBerry narrative.
Another View: What Multiples Say About BlackBerry
The 21.6% undervaluation story meets resistance once you look at what the market is already paying for BlackBerry. The stock trades on a P/E of 65.1x, roughly double the North American Software industry on 31.9x and well above its own fair ratio of 32.9x. This points to valuation risk if expectations cool.
Peers on average trade on a P/E of 72.6x, so BlackBerry is not the priciest option in the group. However, the gap to its fair ratio implies that a lot of future execution is already reflected in the current price. How comfortable are you paying today for that much growth already embedded?
