Optimist Fund’s Investment Thesis for Toast (TOST)

Soumya Eswaran

Tue, May 19, 2026 at 8:32 AM EDT 3 min read

Optimist Fund, an investment management company, released its first-quarter 2026 investor letter. A copy of the letter can be downloaded here. The Fund’s objective is to achieve capital growth at a rate in the mid-teens or higher over the course of several decades. In Q1 2026, the Fund declined 27.3%, driven by a swift shift in the market narrative amid fears of AI disruption and the outbreak of war in Iran. The fund views this drawdown as an opportunity to strengthen the core holdings at more attractive prices. In addition, please check the Fund’s top five holdings to know its best picks in 2026.

In its first-quarter 2026 investor letter, Optimist Fund highlighted Toast, Inc. (NYSE:TOST) as a new portfolio addition. Headquartered in Boston, Massachusetts, Toast, Inc. (NYSE:TOST) is a leading provider of a cloud-based digital technology platform for the restaurant industry. On May 18, 2026, Toast, Inc. (NYSE:TOST) closed at $22.64 per share. One-month return of Toast, Inc. (NYSE:TOST) was -21.03%, and its shares lost 48.92% over the past 52 weeks. Toast, Inc. (NYSE:TOST) has a market capitalization of $13.13 billion.

Optimist Fund stated the following regarding Toast, Inc. (NYSE:TOST) in its Q1 2026 investor letter:

"We also initiated new investments in Toast, Inc. (NYSE:TOST), a disruptive restaurant point-of-sale platform, and Zscaler, a leader in cloud-based cybersecurity. Given its size as a top 10 position, we outline our thesis on Toast in more detail below.

The founders of Toast recognized in 2012 that restaurants were operating on deeply outdated technology. Point-of-sale systems were often built on 15-year-old hardware, running legacy, on-premise software, with payment terminals that were not integrated into the core system. While much of the world was rapidly adopting cloud based infrastructure, restaurants remained stuck with legacy, inefficient systems.

This gap led Toast to build a cloud-native POS platform with fully integrated payments, purpose-built for restaurants. Fourteen years later, Toast has become the leading POS provider for SMB restaurants in the United States, with approximately 20% market share..." (Click here to read the full text)

Toast, Inc. (NYSE:TOST) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 68 hedge fund portfolios held Toast, Inc. (NYSE:TOST) at the end of the fourth quarter, up from 56 in the previous quarter. While we acknowledge the potential of Toast, Inc. (NYSE:TOST) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.