diff --git a/src/passes/CodeFolding.cpp b/src/passes/CodeFolding.cpp
index e53cd4f880d..20a8597ac11 100644
--- a/src/passes/CodeFolding.cpp
+++ b/src/passes/CodeFolding.cpp
@@ -63,6 +63,7 @@
 #include "ir/effects.h"
 #include "ir/eh-utils.h"
 #include "ir/find_all.h"
+#include "ir/iteration.h"
 #include "ir/label-utils.h"
 #include "ir/utils.h"
 #include "pass.h"
@@ -299,6 +300,8 @@ struct CodeFolding
       returnTails.clear();
       unoptimizables.clear();
       modifieds.clear();
+      exitingBranchCache.clear();
+      exitingBranchCachePopulated = false;
       if (needEHFixups) {
         EHUtils::handleBlockNestedPops(func, *getModule());
       }
@@ -306,6 +309,69 @@ struct CodeFolding
   }
 
 private:
+  // Cache of expressions that have branches exiting to targets defined
+  // outside them. Populated lazily on first access via hasExitingBranches().
+  std::unordered_set<Expression*> exitingBranchCache;
+  bool exitingBranchCachePopulated = false;
+
+  bool hasExitingBranches(Expression* expr) {
+    if (!exitingBranchCachePopulated) {
+      populateExitingBranchCache(getFunction()->body);
+      exitingBranchCachePopulated = true;
+    }
+    return exitingBranchCache.count(expr);
+  }
+
+  // Pre-populate the exiting branch cache for all sub-expressions of root
+  // in a single O(N) bottom-up walk. After this, exitingBranchCache
+  // lookups are O(1).
+  void populateExitingBranchCache(Expression* root) {
+    struct CachePopulator
+      : public PostWalker<CachePopulator,
+                          UnifiedExpressionVisitor<CachePopulator>> {
+      std::unordered_set<Expression*>& cache;
+      // Track unresolved branch targets at each node. We propagate children's
+      // targets upward: add uses, remove defs. If any remain, the expression
+      // has exiting branches.
+      std::unordered_map<Expression*, std::unordered_set<Name>> targetSets;
+
+      CachePopulator(std::unordered_set<Expression*>& cache) : cache(cache) {}
+
+      void visitExpression(Expression* curr) {
+        std::unordered_set<Name> targets;
+        // Merge children's target sets into ours (move to avoid copies)
+        ChildIterator children(curr);
+        for (auto* child : children) {
+          auto it = targetSets.find(child);
+          if (it != targetSets.end()) {
+            if (targets.empty()) {
+              targets = std::move(it->second);
+            } else {
+              targets.merge(it->second);
+            }
+            targetSets.erase(it);
+          }
+        }
+        // Add branch uses (names this expression branches to)
+        BranchUtils::operateOnScopeNameUses(
+          curr, [&](Name& name) { targets.insert(name); });
+        // Remove branch defs (names this expression defines as targets)
+        BranchUtils::operateOnScopeNameDefs(curr, [&](Name& name) {
+          if (name.is()) {
+            targets.erase(name);
+          }
+        });
+        bool hasExiting = !targets.empty();
+        if (hasExiting) {
+          cache.insert(curr);
+          targetSets[curr] = std::move(targets);
+        }
+      }
+    };
+    CachePopulator populator(exitingBranchCache);
+    populator.walk(root);
+  }
+
   // check if we can move a list of items out of another item. we can't do so
   // if one of the items has a branch to something inside outOf that is not
   // inside that item
@@ -637,9 +703,7 @@ struct CodeFolding
                                 // TODO: this should not be a problem in
                                 //       *non*-terminating tails, but
                                 //       double-verify that
-                                if (EffectAnalyzer(
-                                      getPassOptions(), *getModule(), newItem)
-                                      .hasExternalBreakTargets()) {
+                                if (hasExitingBranches(newItem)) {
                                   return true;
                                 }
                                 return false;