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NetApp raised its fiscal 2027 revenue outlook by $650 million to $7.975-$8.225 billion amid stronger demand.
NetApp, Inc. (NTAP - Free Report) is benefiting from improved pricing amid rising component and commodity costs, supporting its revenue growth despite a challenging cost environment. The company has adjusted product prices to offset higher input costs, which contributed to stronger-than-expected performance in the first quarter of fiscal 2027. On the last earnings call, management highlighted that pricing benefits, accelerated customer purchases and broad-based demand for AI and infrastructure modernization supported the quarter's results.
NetApp reported first-quarter revenues of $2.03 billion, up 30% year over year, including the benefit of an additional week. Excluding this impact, revenues increased 26%. Product revenues surged 51% to $987 million, reflecting robust demand across its portfolio. The company's product gross margin reached 54.6%, declining 150 basis points sequentially due to higher component costs, partially offset by improved pricing. However, product gross margin exceeded management's expectations, demonstrating its ability to capture higher prices despite cost pressures.
On the last earnings call, management stated that its pricing actions are translating into financial benefits faster than in previous cycles. Historically, price increases took two to three quarters to materialize, but greater pricing agility is now allowing NetApp to realize these benefits earlier. The company also noted that customers continue to prioritize spending on critical infrastructure despite higher prices. However, some customers are delaying less essential projects or shifting toward more cost-effective hybrid flash solutions.
NetApp expects its product gross margin performance for the remainder of fiscal 2027 to be slightly better than previously anticipated, reflecting improved confidence in recovering incremental costs. However, management does not expect pricing-related benefits to remain at the exceptional levels witnessed in the first quarter.
Supported by stronger demand and business momentum, NetApp raised its fiscal 2027 revenue guidance to $7.98-$8.23 billion. The midpoint of $8.1 billion implies 17% year-over-year growth and represents a $650 million increase from its previous forecast. For the second quarter, revenues are projected at $2.1 billion, plus or minus $75 million. Continued pricing improvements, alongside sustained AI-driven infrastructure spending, could support revenue growth despite ongoing component cost pressures.
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 outpacing shipments, while Private Cloud AI, Alletra and GreenLake deepen HPE’s exposure to software, services and recurring consumption. Management has raised its fiscal 2026 and fiscal 2027 outlooks as profitability, free cash flow and deleveraging advance. 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 benefiting 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 2026, Teradata guided its non-GAAP earnings outlook to $2.65-$2.73 per share and adjusted free cash flow forecast to $330-$350 million.
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NetApp Pricing Gains: Can Higher Prices Support Revenue Growth?
Key Takeaways
NetApp, Inc. (NTAP - Free Report) is benefiting from improved pricing amid rising component and commodity costs, supporting its revenue growth despite a challenging cost environment. The company has adjusted product prices to offset higher input costs, which contributed to stronger-than-expected performance in the first quarter of fiscal 2027. On the last earnings call, management highlighted that pricing benefits, accelerated customer purchases and broad-based demand for AI and infrastructure modernization supported the quarter's results.
NetApp reported first-quarter revenues of $2.03 billion, up 30% year over year, including the benefit of an additional week. Excluding this impact, revenues increased 26%. Product revenues surged 51% to $987 million, reflecting robust demand across its portfolio. The company's product gross margin reached 54.6%, declining 150 basis points sequentially due to higher component costs, partially offset by improved pricing. However, product gross margin exceeded management's expectations, demonstrating its ability to capture higher prices despite cost pressures.
On the last earnings call, management stated that its pricing actions are translating into financial benefits faster than in previous cycles. Historically, price increases took two to three quarters to materialize, but greater pricing agility is now allowing NetApp to realize these benefits earlier. The company also noted that customers continue to prioritize spending on critical infrastructure despite higher prices. However, some customers are delaying less essential projects or shifting toward more cost-effective hybrid flash solutions.
NetApp expects its product gross margin performance for the remainder of fiscal 2027 to be slightly better than previously anticipated, reflecting improved confidence in recovering incremental costs. However, management does not expect pricing-related benefits to remain at the exceptional levels witnessed in the first quarter.
Supported by stronger demand and business momentum, NetApp raised its fiscal 2027 revenue guidance to $7.98-$8.23 billion. The midpoint of $8.1 billion implies 17% year-over-year growth and represents a $650 million increase from its previous forecast. For the second quarter, revenues are projected at $2.1 billion, plus or minus $75 million. Continued pricing improvements, alongside sustained AI-driven infrastructure spending, could support revenue growth despite ongoing component cost pressures.
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 outpacing shipments, while Private Cloud AI, Alletra and GreenLake deepen HPE’s exposure to software, services and recurring consumption. Management has raised its fiscal 2026 and fiscal 2027 outlooks as profitability, free cash flow and deleveraging advance. 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 benefiting 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 2026, Teradata guided its non-GAAP earnings outlook to $2.65-$2.73 per share and adjusted free cash flow forecast to $330-$350 million.
NTAP Price Performance, Valuation & Estimates
Shares of NetApp have gained 27.5% in the past three months against the Computer-Storage Devices industry’s decline of 3%.
Image Source: Zacks Investment Research
Regarding the price/book ratio, NTAP is trading at 29.18, higher than the industry’s multiple of 12.81.
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.