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NetApp Up 14% in a Month: How Should Investors Play the Stock?
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Key Takeaways
NetApp gained 14% in a month, boosted by strength in flash, cloud and AI businesses.
Keystone storage-as-a-service revenues jumped 80%, driving Professional Services topline growth.
Free cash flow reached $620M, enabling $404M in dividends and buybacks last quarter.
NetApp Inc’s (NTAP - Free Report) shares have registered a gain of 14.2% in the past month, higher than the 2% growth of the Computer Storage Devices Industry. Over the same time frame, the Computer and Technology sector and the S&P 500 composite are up 1.3% and 2.1%, respectively.
Image Source: Zacks Investment Research
NTAP lost 1% yesterday and closed the session at $116.47, down 14% from its 52-week high of $135.45. This raises the question of whether this pullback signals a buying opportunity.
To determine if it is the right time to buy, sell or hold NTAP stock, let us carefully evaluate the key factors.
NTAP’s Tailwinds
Strength in flash business, Public Cloud segment and emerging opportunities in cloud/AI bode well for NetApp.
NetApp is witnessing higher demand from customers for its portfolio of modern all-flash arrays, including the C-series capacity flash and ASA block-optimized flash. The company expects the new AFF A-series, along with its C-series and ASA products, to capture further share in the all-flash market. Management highlighted that at the end of the first quarter of fiscal 2026, 45% of systems in its installed base under active support contracts are all-flash. All-Flash Array Business annualized net revenue run rate was $3.6 billion, up 6% year over year. Total billings rose 4% year over year to $1.5 billion.
NetApp’s Keystone storage-as-a-service offering has been gaining significant traction. Keystone revenues grew 80% year over year in the fiscal first quarter. This led to an 18% jump in Professional Services revenues to $97 million. With $415 million in unbilled RPO (indicator for Keystone performance), up 40% year over year, the pipeline for Keystone remains robust.
Solid momentum in hyperscaler first-party and marketplace storage services has been driving revenues from the Public Cloud. First-party and marketplace cloud storage services grew 33% in the fiscal first quarter. NetApp’s partnerships with major hyperscalers such as Amazon and Microsoft, through offerings like Amazon FSx for NetApp ONTAP and Microsoft Azure NetApp Files, solidify its position as a critical player in the cloud infrastructure space, which is poised for continued growth as enterprises migrate more workloads to the cloud.
Apart from the demand for flash and block, the increasing demand for NetApp’s cloud storage and AI solutions bodes well. In the fiscal first quarter, the company won more than 125 AI and data lake modernization deals. The company expanded its AI ecosystem and launched a new AIPod Mini with Intel. This solution tackles the cost and complexity challenges of implementing AI at the department and team levels. It also completed the NetApp reference architecture for NVIDIA Cloud Partners.
NTAP’s Strong Capital Deployment
NetApp’s cash, cash equivalents and investments were $3.32 billion. Its long-term debt was $2.485 billion as of July 25, 2025. Net cash from operations was $673 million, while free cash flow was $620 million (free cash flow margin of 39.8%). Net cash balance provides the required flexibility to pursue any growth strategy, whether through acquisitions or otherwise. A strong balance sheet helps NetApp continue its shareholder-friendly initiatives of dividend payouts.
The company returned $404 million to its shareholders as dividend payouts and share repurchases in the fiscal first quarter. NetApp returned $300 million to its shareholders through share repurchases and distributed $104 million in dividends. The company returned $1.57 billion to its shareholders as dividend payouts and share repurchases in fiscal 2025.
In the past 60 days, analysts have revised earnings estimates upward for the current quarter and current year.
Image Source: Zacks Investment Research
Challenges Remain for NTAP
Management continues to expect spending caution amid an uncertain global macroeconomic outlook. Softness in the U.S. Public Sector and the EMEA weighed on the fiscal first-quarter results, with revenues increasing just 1% year over year. Fiscal 2026 revenues are forecasted to be in the range of $6.625-$6.875 billion. Storage cycles and infrastructure refreshes can be deferred if macro worsens, leading to top-line erosion. Stiff competition in the flash and cloud markets remains an additional headwind.
NTAP’s Valuation
NetApp’s forward 12-month price-to-earnings ratio of 14.46X is below the industry average of 18.82X observed in the past year.
Image Source: Zacks Investment Research
How to Play NTAP Stock?
NetApp’s strong flash portfolio, Keystone momentum and deep hyperscaler partnerships provide long-term growth catalysts, especially in AI and cloud. Its solid balance sheet, robust free cash flow and consistent shareholder returns are other tailwinds.
However, macro uncertainties and spending caution, and stiff competition may limit near-term upside.
NTAP carries a Zacks Rank #3 (Hold) at present. We believe new investors should wait for a better entry point and existing investors should retain NTAP stock amid favorable long-term catalysts.
The Zacks Consensus Estimate for WDC’s fiscal 2026 EPS is pegged at $6.50, unchanged in the past seven days. WDC’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 6.77%. Its shares have increased 37.4% in the past year.
The Zacks Consensus Estimate for NLST’s 2025 earnings is pegged at a loss of 7 cents per share, unchanged in the past seven days. NLST’s earnings beat the Zacks Consensus Estimate in one of the trailing four quarters, while missing twice and matching in the remaining quarter, with the average surprise being 24.17%. The share price has declined 33.9% in the past year.
The Zacks Consensus Estimate for HPE’s fiscal 2025 EPS is pegged at $1.89. HPE’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while missing once, with the average surprise being 5.98%. Its shares have surged 29.3% in the past year.
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NetApp Up 14% in a Month: How Should Investors Play the Stock?
Key Takeaways
NetApp Inc’s (NTAP - Free Report) shares have registered a gain of 14.2% in the past month, higher than the 2% growth of the Computer Storage Devices Industry. Over the same time frame, the Computer and Technology sector and the S&P 500 composite are up 1.3% and 2.1%, respectively.
Image Source: Zacks Investment Research
NTAP lost 1% yesterday and closed the session at $116.47, down 14% from its 52-week high of $135.45. This raises the question of whether this pullback signals a buying opportunity.
To determine if it is the right time to buy, sell or hold NTAP stock, let us carefully evaluate the key factors.
NTAP’s Tailwinds
Strength in flash business, Public Cloud segment and emerging opportunities in cloud/AI bode well for NetApp.
NetApp is witnessing higher demand from customers for its portfolio of modern all-flash arrays, including the C-series capacity flash and ASA block-optimized flash. The company expects the new AFF A-series, along with its C-series and ASA products, to capture further share in the all-flash market. Management highlighted that at the end of the first quarter of fiscal 2026, 45% of systems in its installed base under active support contracts are all-flash. All-Flash Array Business annualized net revenue run rate was $3.6 billion, up 6% year over year. Total billings rose 4% year over year to $1.5 billion.
NetApp’s Keystone storage-as-a-service offering has been gaining significant traction. Keystone revenues grew 80% year over year in the fiscal first quarter. This led to an 18% jump in Professional Services revenues to $97 million. With $415 million in unbilled RPO (indicator for Keystone performance), up 40% year over year, the pipeline for Keystone remains robust.
Solid momentum in hyperscaler first-party and marketplace storage services has been driving revenues from the Public Cloud. First-party and marketplace cloud storage services grew 33% in the fiscal first quarter. NetApp’s partnerships with major hyperscalers such as Amazon and Microsoft, through offerings like Amazon FSx for NetApp ONTAP and Microsoft Azure NetApp Files, solidify its position as a critical player in the cloud infrastructure space, which is poised for continued growth as enterprises migrate more workloads to the cloud.
Apart from the demand for flash and block, the increasing demand for NetApp’s cloud storage and AI solutions bodes well. In the fiscal first quarter, the company won more than 125 AI and data lake modernization deals. The company expanded its AI ecosystem and launched a new AIPod Mini with Intel. This solution tackles the cost and complexity challenges of implementing AI at the department and team levels. It also completed the NetApp reference architecture for NVIDIA Cloud Partners.
NTAP’s Strong Capital Deployment
NetApp’s cash, cash equivalents and investments were $3.32 billion. Its long-term debt was $2.485 billion as of July 25, 2025. Net cash from operations was $673 million, while free cash flow was $620 million (free cash flow margin of 39.8%). Net cash balance provides the required flexibility to pursue any growth strategy, whether through acquisitions or otherwise. A strong balance sheet helps NetApp continue its shareholder-friendly initiatives of dividend payouts.
The company returned $404 million to its shareholders as dividend payouts and share repurchases in the fiscal first quarter. NetApp returned $300 million to its shareholders through share repurchases and distributed $104 million in dividends. The company returned $1.57 billion to its shareholders as dividend payouts and share repurchases in fiscal 2025.
In the past 60 days, analysts have revised earnings estimates upward for the current quarter and current year.
Image Source: Zacks Investment Research
Challenges Remain for NTAP
Management continues to expect spending caution amid an uncertain global macroeconomic outlook. Softness in the U.S. Public Sector and the EMEA weighed on the fiscal first-quarter results, with revenues increasing just 1% year over year. Fiscal 2026 revenues are forecasted to be in the range of $6.625-$6.875 billion. Storage cycles and infrastructure refreshes can be deferred if macro worsens, leading to top-line erosion. Stiff competition in the flash and cloud markets remains an additional headwind.
NTAP’s Valuation
NetApp’s forward 12-month price-to-earnings ratio of 14.46X is below the industry average of 18.82X observed in the past year.
Image Source: Zacks Investment Research
How to Play NTAP Stock?
NetApp’s strong flash portfolio, Keystone momentum and deep hyperscaler partnerships provide long-term growth catalysts, especially in AI and cloud. Its solid balance sheet, robust free cash flow and consistent shareholder returns are other tailwinds.
However, macro uncertainties and spending caution, and stiff competition may limit near-term upside.
NTAP carries a Zacks Rank #3 (Hold) at present. We believe new investors should wait for a better entry point and existing investors should retain NTAP stock amid favorable long-term catalysts.
Stocks to Consider
Some better-ranked stocks from the broader technology space are Western Digital Corporation (WDC - Free Report) , Netlist (NLST - Free Report) and Hewlett Packard (HPE - Free Report) . While WDC sports a Zacks Rank #1 (Strong Buy), NLST and HPE carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for WDC’s fiscal 2026 EPS is pegged at $6.50, unchanged in the past seven days. WDC’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 6.77%. Its shares have increased 37.4% in the past year.
The Zacks Consensus Estimate for NLST’s 2025 earnings is pegged at a loss of 7 cents per share, unchanged in the past seven days. NLST’s earnings beat the Zacks Consensus Estimate in one of the trailing four quarters, while missing twice and matching in the remaining quarter, with the average surprise being 24.17%. The share price has declined 33.9% in the past year.
The Zacks Consensus Estimate for HPE’s fiscal 2025 EPS is pegged at $1.89. HPE’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while missing once, with the average surprise being 5.98%. Its shares have surged 29.3% in the past year.