We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
NTAP Down 11.3% in the Past 3 Months: Will the Stock Rebound in 2026?
Read MoreHide Full Article
Key Takeaways
NTAP stock fell 11.3% in three months, lagging the tech sector and storage industry.
Flash arrays business and Keystone gain traction while macro caution and public-sector softness concerns.
NetApp is leveraging AI deals, hyperscaler partnerships and a strong balance sheet to drive long-term growth.
NetApp Inc. ((NTAP - Free Report) ) has had a challenging few months, with its stock declining roughly 11.3% over the past three months, underperforming both the broader Computer and Technology sector’s growth (4.6%) and the Computer Storage Devices Industry’s rise (25.4%).
Price Performance
Image Source: Zacks Investment Research
NTAP closed the last session at $105.39, down 17.5% from its 52-week high of $127.78.
The pullback has raised a key question for investors: Is this an opportunity, or does it reflect deeper business concerns?
Let us carefully evaluate the key factors to determine the best course of action for your portfolio.
What Is Causing the Price Decline?
NetApp’s recent underperformance could be due to macro-driven caution and company-specific challenges.
An uncertain global macroeconomic outlook could impact customer purchasing behavior. Softness in the U.S. Public Sector remains a concern as the company anticipates near-term headwinds in this vertical.
Storage cycles and infrastructure refreshes can be deferred if macro worsens, leading to top-line erosion. Intensifying competition from the likes of Pure Storage, as well as other data management and cloud storage companies, remains a key concern.
Nonetheless, fiscal 2026 revenues are still forecasted to be in the range of $6.625-$6.875 billion, driven by demand for its solutions.
Flash & Cloud Businesses Key Catalysts
One of NetApp’s most important growth levers is its all-flash array business. The segment is witnessing higher demand from customers for its portfolio of modern all-flash arrays, especially 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.
At the end of the second quarter of fiscal 2026, 46% of systems in its installed base under active support contracts were all-flash. The company’s All-Flash Array revenues increased 9% year over year to $1 billion, representing an annualized run rate of $4.1 billion. Total billings rose 4% year over year to $1.65 billion.
NetApp’s Keystone storage-as-a-service offering has been gaining significant traction. Keystone revenues grew 76% year over year in the fiscal second quarter. This led to a 13.8% jump in Professional Services revenues to $99 million. With $456 million in unbilled RPO (indicator for Keystone performance), up 39% 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. The Public Cloud segment’s revenues improved 2% to $171 million. Excluding Spot, Public Cloud revenues grew 18% year over year, supported by strong demand for first-party and marketplace storage services.
First-party and marketplace cloud storage services grew 32%. 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.
AI Tailwinds to Drive Long-Term Growth
NetApp remains focused on capturing a bigger share of the AI cycle and is investing accordingly. Customer adoption is increasing, with roughly 200 AI infrastructure and data-modernization deals closed in the fiscal second quarter.
The launch of AFX and the AI Data Engine expands its enterprise-grade AI data capabilities. It has also introduced NetApp Keystone Storage-as-a-Service for enterprise AI. The launch of AI reference architectures with NVIDIA (AIDP), Intel (AIPod Mini), Cisco (FlexPod) and Lenovo (AIPod), and certification for NVIDIA DGX SuperPOD, indicates NetApp is deeply embedded in the evolving AI stack.
Strong Financials & Cash to Keep Momentum Going
In the last reported quarter, the company reported revenues of $1.71 billion, which increased 3% year over year. Non-GAAP operating income increased 12% year over year to $530 million. Non-GAAP operating margin was 31.1%, up from 28.6%. Non-GAAP earnings of $2.05 per share beat the Zacks Consensus Estimate by 8.5%. The figure increased 10% year over year.
NetApp exited the quarter ended Oct. 24, 2025, with $3 billion in cash, cash equivalents and investments, and long-term debt was $2.486 billion. Net cash from operations was $127 million, while free cash flow was $78 million.
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.
Strong Shareholders' Returns Enhances Appeal
NTAP returned $353 million to its shareholders as dividend payouts and share repurchases in the fiscal second quarter. The company also announced a dividend of 52 cents per share payable on Jan. 21, 2026, to its shareholders of record as of Jan. 2. The company returned $1.57 billion to its shareholders as dividend payouts and share repurchases in fiscal 2025.
NTAP’s Valuation & Estimates
NetApp’s forward 12-month price-to-earnings ratio of 12.52X is below the industry average of 20.86X observed in the past year.
Image Source: Zacks Investment Research
Analysts have marginally revised earnings estimates upward for the current year.
Image Source: Zacks Investment Research
Conclusion: Retain NTAP
NetApp’s strong flash portfolio, growing Keystone adoption and deep partnerships with major hyperscalers serve as key long-term growth drivers, particularly across AI and cloud opportunities. The company’s solid balance sheet, healthy free cash flow generation and consistent shareholder returns further strengthen its outlook.
That said, macroeconomic uncertainties, cautious enterprise spending and intense industry competition could constrain near-term gains.
With a Zacks Rank #3 (Hold), NTAP appears best suited for existing investors to maintain their positions, while new investors can wait for a more attractive entry point ahead.
The Zacks Consensus Estimate for Sandisk’s fiscal 2026 EPS is pegged at $13.46, up 6.9% in the past seven days. SNDK’s earnings beat the Zacks Consensus Estimate in each of the trailing three quarters, with the average surprise being 470%. Its shares have increased 676.5% in the past year.
The Zacks Consensus Estimate for STX’s fiscal 2026 earnings is pegged at $11.26 per share, unchanged in the past seven days. STX’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 7.95%. The share price has skyrocketed 241.8% in the past year.
The Zacks Consensus Estimate for Teradata’s 2025 EPS is pegged at $2.40. TDC’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 23.1%. Its shares have gained 4.7% in the past year.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
NTAP Down 11.3% in the Past 3 Months: Will the Stock Rebound in 2026?
Key Takeaways
NetApp Inc. ((NTAP - Free Report) ) has had a challenging few months, with its stock declining roughly 11.3% over the past three months, underperforming both the broader Computer and Technology sector’s growth (4.6%) and the Computer Storage Devices Industry’s rise (25.4%).
Price Performance
Image Source: Zacks Investment Research
NTAP closed the last session at $105.39, down 17.5% from its 52-week high of $127.78.
The pullback has raised a key question for investors: Is this an opportunity, or does it reflect deeper business concerns?
Let us carefully evaluate the key factors to determine the best course of action for your portfolio.
What Is Causing the Price Decline?
NetApp’s recent underperformance could be due to macro-driven caution and company-specific challenges.
An uncertain global macroeconomic outlook could impact customer purchasing behavior. Softness in the U.S. Public Sector remains a concern as the company anticipates near-term headwinds in this vertical.
Storage cycles and infrastructure refreshes can be deferred if macro worsens, leading to top-line erosion. Intensifying competition from the likes of Pure Storage, as well as other data management and cloud storage companies, remains a key concern.
Nonetheless, fiscal 2026 revenues are still forecasted to be in the range of $6.625-$6.875 billion, driven by demand for its solutions.
Flash & Cloud Businesses Key Catalysts
One of NetApp’s most important growth levers is its all-flash array business. The segment is witnessing higher demand from customers for its portfolio of modern all-flash arrays, especially 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.
At the end of the second quarter of fiscal 2026, 46% of systems in its installed base under active support contracts were all-flash. The company’s All-Flash Array revenues increased 9% year over year to $1 billion, representing an annualized run rate of $4.1 billion. Total billings rose 4% year over year to $1.65 billion.
NetApp’s Keystone storage-as-a-service offering has been gaining significant traction. Keystone revenues grew 76% year over year in the fiscal second quarter. This led to a 13.8% jump in Professional Services revenues to $99 million. With $456 million in unbilled RPO (indicator for Keystone performance), up 39% 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. The Public Cloud segment’s revenues improved 2% to $171 million. Excluding Spot, Public Cloud revenues grew 18% year over year, supported by strong demand for first-party and marketplace storage services.
First-party and marketplace cloud storage services grew 32%. 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.
AI Tailwinds to Drive Long-Term Growth
NetApp remains focused on capturing a bigger share of the AI cycle and is investing accordingly. Customer adoption is increasing, with roughly 200 AI infrastructure and data-modernization deals closed in the fiscal second quarter.
The launch of AFX and the AI Data Engine expands its enterprise-grade AI data capabilities. It has also introduced NetApp Keystone Storage-as-a-Service for enterprise AI. The launch of AI reference architectures with NVIDIA (AIDP), Intel (AIPod Mini), Cisco (FlexPod) and Lenovo (AIPod), and certification for NVIDIA DGX SuperPOD, indicates NetApp is deeply embedded in the evolving AI stack.
Strong Financials & Cash to Keep Momentum Going
In the last reported quarter, the company reported revenues of $1.71 billion, which increased 3% year over year. Non-GAAP operating income increased 12% year over year to $530 million. Non-GAAP operating margin was 31.1%, up from 28.6%. Non-GAAP earnings of $2.05 per share beat the Zacks Consensus Estimate by 8.5%. The figure increased 10% year over year.
NetApp exited the quarter ended Oct. 24, 2025, with $3 billion in cash, cash equivalents and investments, and long-term debt was $2.486 billion. Net cash from operations was $127 million, while free cash flow was $78 million.
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.
Strong Shareholders' Returns Enhances Appeal
NTAP returned $353 million to its shareholders as dividend payouts and share repurchases in the fiscal second quarter. The company also announced a dividend of 52 cents per share payable on Jan. 21, 2026, to its shareholders of record as of Jan. 2. The company returned $1.57 billion to its shareholders as dividend payouts and share repurchases in fiscal 2025.
NTAP’s Valuation & Estimates
NetApp’s forward 12-month price-to-earnings ratio of 12.52X is below the industry average of 20.86X observed in the past year.
Image Source: Zacks Investment Research
Analysts have marginally revised earnings estimates upward for the current year.
Image Source: Zacks Investment Research
Conclusion: Retain NTAP
NetApp’s strong flash portfolio, growing Keystone adoption and deep partnerships with major hyperscalers serve as key long-term growth drivers, particularly across AI and cloud opportunities. The company’s solid balance sheet, healthy free cash flow generation and consistent shareholder returns further strengthen its outlook.
That said, macroeconomic uncertainties, cautious enterprise spending and intense industry competition could constrain near-term gains.
With a Zacks Rank #3 (Hold), NTAP appears best suited for existing investors to maintain their positions, while new investors can wait for a more attractive entry point ahead.
Stocks to Consider
Some better-ranked stocks from the broader technology space are Sandisk Corporation ((SNDK - Free Report) ), Seagate Technology Holdings Plc ((STX - Free Report) ) and Teradata ((TDC - Free Report) ). SNDK and STX sport a Zacks Rank #1 (Strong Buy) each, while Teradata carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Sandisk’s fiscal 2026 EPS is pegged at $13.46, up 6.9% in the past seven days. SNDK’s earnings beat the Zacks Consensus Estimate in each of the trailing three quarters, with the average surprise being 470%. Its shares have increased 676.5% in the past year.
The Zacks Consensus Estimate for STX’s fiscal 2026 earnings is pegged at $11.26 per share, unchanged in the past seven days. STX’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 7.95%. The share price has skyrocketed 241.8% in the past year.
The Zacks Consensus Estimate for Teradata’s 2025 EPS is pegged at $2.40. TDC’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 23.1%. Its shares have gained 4.7% in the past year.