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.
Can AI and Flash Demand Power NetApp's Raised FY27 Outlook?
Read MoreHide Full Article
Key Takeaways
NetApp posted record Q1 revenue of $2.03 billion, up 30% year over year.
NTAP secured roughly 350 AI and data lake modernization deals as projects moved into production.
All-flash array revenue rose 47% to $1.31 billion, supporting higher fiscal 2027 guidance.
NetApp, Inc. (NTAP - Free Report) entered fiscal 2027 with strong momentum, supported by growing demand across AI, flash storage and broader infrastructure modernization. The company started the year with record first-quarter revenues of $2.03 billion, up 30% year over year, as demand strengthened across customer types, geographies and workloads. On the last earnings call, management stated that the performance reflected not only accelerated purchases and pricing benefits but also a structural improvement in the underlying demand environment.
AI is becoming an increasingly important growth driver. NetApp secured roughly 350 AI and data lake modernization deals in the first quarter, with deal sizes increasing as customers moved from proof-of-concept projects to production deployments. Demand is extending beyond dedicated AI systems as enterprises modernize databases and unstructured data environments to prepare for AI inferencing and analytics. Management also noted that AI is influencing broader data-infrastructure spending, making it difficult to isolate its exact revenue contribution.
Flash demand is another major tailwind. All-flash array revenues reached $1.31 billion in the quarter, rising 47% year over year, as customers standardized on NetApp for mission-critical workloads, including GPU-intensive AI pipelines. Management expects all-flash to remain the predominant contributor to the acceleration in the business. At the same time, hybrid flash demand is strengthening as customers seek more cost-effective solutions for lower-priority workloads, adding breadth to NetApp’s storage momentum.
The strong start prompted NetApp to materially raise its fiscal 2027 expectations. Revenues are projected between $7.98 billion and $8.23 billion, with the $8.10 billion midpoint implying 17% year-over-year growth and standing $650 million above the prior guidance. The company also raised its operating margin forecast to 30.3-31.3% and EPS guidance to $9.73-$10.03, with the midpoint representing 22% growth. Overall, the raised outlook reflects management’s confidence that AI-driven modernization, robust all-flash demand and broader portfolio strength can sustain momentum through the year.
Hewlett Packard Enterprise (HPE - Free Report) is benefiting from a broader shift toward AI infrastructure, networking modernization and hybrid cloud, with Juniper expanding its addressable market and integration synergies supporting earnings growth. Record orders and backlog show demand is ahead of shipments, while Private Cloud AI, Alletra and GreenLake deepen HPE’s exposure to software, services and recurring consumption. For fiscal 2026, HPE raised its revenue growth outlook to 34-37% and non-GAAP earnings per share guidance to $3.75-$3.85. For fiscal 2027, management raised its revenue growth framework to 13-17% and projected non-GAAP earnings-per-share growth of 16-20%.
Teradata Corporation (TDC - Free Report) is gaining from rising recurring revenue, expanding operating leverage and a strengthened balance sheet that gives the company room to fund AI innovation and shareholder returns. The Autonomous Knowledge Platform broadens its hybrid data and AI proposition, while Teradata Factory and AI Studio target regulated, sovereign and production-scale agentic AI workloads. Customer interest and early wins support the strategic shift and stronger retention over time. For the third quarter of 2026, Teradata expects revenues to decline 6% to 4% year over year, while recurring revenues are expected to decrease 4% to 2%. For 2026, Teradata reaffirmed its forecast for total ARR growth of 2-4% year over year, recurring revenue growth of flat to 2%, and total revenue performance ranging from a 2% decline to flat.
View the Zacks #1 Rank List
Image: Bigstock
Can AI and Flash Demand Power NetApp's Raised FY27 Outlook?
Key Takeaways
NetApp, Inc. (NTAP - Free Report) entered fiscal 2027 with strong momentum, supported by growing demand across AI, flash storage and broader infrastructure modernization. The company started the year with record first-quarter revenues of $2.03 billion, up 30% year over year, as demand strengthened across customer types, geographies and workloads. On the last earnings call, management stated that the performance reflected not only accelerated purchases and pricing benefits but also a structural improvement in the underlying demand environment.
AI is becoming an increasingly important growth driver. NetApp secured roughly 350 AI and data lake modernization deals in the first quarter, with deal sizes increasing as customers moved from proof-of-concept projects to production deployments. Demand is extending beyond dedicated AI systems as enterprises modernize databases and unstructured data environments to prepare for AI inferencing and analytics. Management also noted that AI is influencing broader data-infrastructure spending, making it difficult to isolate its exact revenue contribution.
Flash demand is another major tailwind. All-flash array revenues reached $1.31 billion in the quarter, rising 47% year over year, as customers standardized on NetApp for mission-critical workloads, including GPU-intensive AI pipelines. Management expects all-flash to remain the predominant contributor to the acceleration in the business. At the same time, hybrid flash demand is strengthening as customers seek more cost-effective solutions for lower-priority workloads, adding breadth to NetApp’s storage momentum.
The strong start prompted NetApp to materially raise its fiscal 2027 expectations. Revenues are projected between $7.98 billion and $8.23 billion, with the $8.10 billion midpoint implying 17% year-over-year growth and standing $650 million above the prior guidance. The company also raised its operating margin forecast to 30.3-31.3% and EPS guidance to $9.73-$10.03, with the midpoint representing 22% growth. Overall, the raised outlook reflects management’s confidence that AI-driven modernization, robust all-flash demand and broader portfolio strength can sustain momentum through the year.
Taking a Look at NTAP's Competitors
Hewlett Packard Enterprise (HPE - Free Report) is benefiting from a broader shift toward AI infrastructure, networking modernization and hybrid cloud, with Juniper expanding its addressable market and integration synergies supporting earnings growth. Record orders and backlog show demand is ahead of shipments, while Private Cloud AI, Alletra and GreenLake deepen HPE’s exposure to software, services and recurring consumption. For fiscal 2026, HPE raised its revenue growth outlook to 34-37% and non-GAAP earnings per share guidance to $3.75-$3.85. For fiscal 2027, management raised its revenue growth framework to 13-17% and projected non-GAAP earnings-per-share growth of 16-20%.
Teradata Corporation (TDC - Free Report) is gaining from rising recurring revenue, expanding operating leverage and a strengthened balance sheet that gives the company room to fund AI innovation and shareholder returns. The Autonomous Knowledge Platform broadens its hybrid data and AI proposition, while Teradata Factory and AI Studio target regulated, sovereign and production-scale agentic AI workloads. Customer interest and early wins support the strategic shift and stronger retention over time. For the third quarter of 2026, Teradata expects revenues to decline 6% to 4% year over year, while recurring revenues are expected to decrease 4% to 2%. For 2026, Teradata reaffirmed its forecast for total ARR growth of 2-4% year over year, recurring revenue growth of flat to 2%, and total revenue performance ranging from a 2% decline to flat.
NTAP Price Performance, Valuation & Estimates
Shares of NetApp have gained 29.8% in the past three months against the Computer-Storage Devices industry’s decline of 16%.
Image Source: Zacks Investment Research
Regarding the price/book ratio, NTAP is trading at 25.91, higher than the industry’s multiple of 15.37.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NTAP’s earnings for fiscal 2027 has been revised upward over the past 60 days.
Image Source: Zacks Investment Research
NTAP currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.