Is Toast Stock a Buy After a Record 9,500-Restaurant Quarter?

Toast (NYSE: TOST) is a fast-growing digital restaurant platform, and its products can be life-changing for the chains and individual restaurant owners that sign up. Long gone are the days when a waiter or waitress would pull a pencil from behind their ear and write down your order; today, everything from menus to payments are digital, and Toast saves companies money by automating and connecting all of their activities.

Toast stock, though, hasn't performed particularly well since its 2021 debut. This year, it's down almost 9% despite excellent performance. Here's why, and whether it's a buy right now.

Image source: Toast.

9,500 new locations

Adding a platform like Toast to a restaurant is a no-brainer, and it's been racking up a high customer count as traditional and new locations alike hop on board. It added 9,500 new locations in the 2026 second quarter, a 22% increase over last year, for a total of 180,000.

It has reported strong sales growth since the beginning, and it's keeping up that trend. It uses annualized recurring run rate (ARR) as its top-line metric, and here's how it's been growing over the past four quarters:

Data source: Toast quarterly reports. Growth is year over year.

It also turned net income positive last year, and profits have been increasing since then.

TOST Net Income (Quarterly) data by YCharts

AI, SaaS, and Toast's opportunities

Toast was one of the software-as-a-service (SaaS) stocks that were crushed when agentic artificial intelligence (AI) was popularized last year. The market's thinking was that clients would cancel subscriptions to SaaS stocks if they could have AI agents doing the tasks instead.

However, most SaaS stocks went on the offensive, integrating AI agents into their software to offer greater value to their clients. The AI angle has become a benefit instead of a drag.

Toast has transformed its platform through AI, and its data analytics, paired with AI agents, makes it that much more valuable to busy clients. CEO Aman Narang noted that clients who were on the platform were still too busy to take full advantage of what it offers and ended up outsourcing tasks like payroll and marketing. Now, they can plug in AI agents on the platform to get more use out of it.

He pointed out that Toast has tons of data from 14 years of operations that it can interpret for customers. "We know what a smart menu change looks like versus a bad one, when a staffing pattern signals trouble, and which pricing moves hold up in a given market," he said.

Is Toast stock a buy?

Toast stock trades at 41 times trailing-12-month earnings and 19 times forward one-year earnings, implying an expected increase in earnings. It hit an all-time low P/E ratio before the second-quarter report, and the higher post-report multiple indicates that at current growth rates, the market thought it was oversold.

I wouldn't call Toast a bargain today, but it's a well-run company with long-term opportunity, and a small position could make sense for investors with some appetite for risk.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Toast. The Motley Fool recommends the following options: long January 2028 $15 calls on Toast. The Motley Fool has a disclosure policy.