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Quantum vs. NetApp: Which Data Storage Stock is the Better Buy?
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Key Takeaways
Quantum and NetApp benefit from rising AI and cloud storage demand, but their growth prospects differ.
QMCO's revenues rose 25.7%, while NTAP posted 30% growth in first-quarter fiscal 2027.
NetApp leads in profitability and stock performance, while Quantum offers a lower forward sales valuation.
Quantum Corporation (QMCO - Free Report) and NetApp, Inc. (NTAP - Free Report) are two players in the data storage industry, helping enterprises address growing data volumes, infrastructure complexity and evolving storage requirements. Quantum focuses on delivering efficient, resilient and cost-effective data storage solutions through its ActiveScale and tape storage portfolio. The company is witnessing growing demand from enterprise and hyperscale customers seeking to optimize storage costs, reduce power consumption and strengthen cyber resilience.
Meanwhile, NetApp offers a unified data infrastructure platform spanning all-flash and hybrid storage, public cloud and storage-as-a-service solutions. Its offerings help enterprises modernize data infrastructure, accelerate AI adoption and manage workloads across hybrid multicloud environments.
Both companies are benefiting from rising demand for data storage infrastructure, supported by expanding AI workloads, cloud adoption and enterprise modernization initiatives. Quantum is gaining traction from its expanding ActiveScale deployments, larger enterprise deals and growing tape storage opportunities, although supply constraints remain a challenge. NetApp is witnessing strong momentum across its all-flash, public cloud and AI-related businesses, supported by new customer wins and strategic investments.
With both companies pursuing growth opportunities in the evolving data storage market, investors may wonder which stock offers a more compelling investment proposition. Let us take a closer look at their fundamentals, growth prospects and challenges to determine which is the better buy.
The Case for QMCO
Quantum is gaining from robust demand for its data storage solutions as enterprises increasingly focus on managing growing data volumes, reducing infrastructure costs and improving power efficiency. In the first quarter of fiscal 2027, revenues increased 25.7% year over year to $80.8 million, exceeding management's guidance. Revenues in the Americas and APAC regions grew more than 20% and 50% sequentially, respectively. The company also witnessed approximately 10% sequential growth in service revenues, signaling stabilization after several years of decline. These trends highlight improving business momentum across enterprise and cloud environments.
The company is benefiting from growing adoption of its ActiveScale and tape storage solutions. Its tape opportunity pipeline reached its highest level in years, supported by increasing customer interest in cost-efficient and cyber-resilient storage infrastructure. Quantum witnessed a substantial increase in deals exceeding $1 million, with most valued above $3 million. Notable wins included an ActiveScale renewal and expansion with a leading European biometrics institution and a significant Scalar i7 deployment with an APAC hyperscaler, valued well above eight figures. Expanding customer relationships and larger deal sizes strengthen its growth prospects.
Quantum's profitability is improving, supported by stronger pricing, restructuring benefits and disciplined cost management. GAAP gross margin expanded 360 basis points (bps) sequentially to 39.3%, its highest level in five quarters. Non-GAAP operating expenses declined 16% year over year to $25.1 million despite higher revenues. Adjusted EBITDA was $8 million against a loss of $6.5 million in the year-ago quarter. The company also generated non-GAAP net income of $4 million versus a loss of $14.5 million a year earlier, reflecting improving operating leverage.
Quantum's strengthened balance sheet provides additional financial flexibility. Following its private placement and debt repayment, the company eliminated its outstanding debt compared with $144.8 million at fiscal 2026-end. Cash, cash equivalents and restricted cash increased to $54.6 million from $16.2 million. The elimination of debt should significantly reduce interest expenses, supporting future profitability and cash flow generation.
Quantum Corporation Price, Consensus and EPS Surprise
However, Quantum is grappling with persistent supply-chain constraints that continue to restrict its ability to fulfill strong customer demand. Limited availability of tape drives and certain disk drives is delaying potential revenue conversion despite increasing backlog and bookings. Management indicated that tape drive supply had shown little improvement through August 2026. Continued component shortages and pricing volatility could constrain revenue growth and pressure margins.
The company also faces near-term profitability headwinds from rising operating expenses and uncertainty surrounding large deals. Management expects second-quarter fiscal 2027 non-GAAP operating expenses of approximately $27 million compared with $25.1 million in the preceding quarter, reflecting higher sales commissions and increased R&D hiring. Consequently, adjusted EBITDA is projected to decline sequentially to $6 million despite anticipated revenue growth to approximately $82 million.
Additionally, Quantum reported a substantial GAAP net loss of $155.3 million in the first quarter, primarily reflecting $157.7 million in non-cash debt-related charges. Although these charges were largely one-time in nature, the significant reported loss underscores the volatility in its financial results.
The Case for NTAP
NetApp is gaining from robust demand for AI-driven data infrastructure, cloud storage and enterprise modernization solutions. In the first quarter of fiscal 2027, revenues surged 30% year over year to $2.03 billion, reflecting broad-based strength across customer segments, industries and geographies. Excluding the benefit of an additional week, revenues increased 26%. Growing adoption of its unified data platform, coupled with new customer acquisitions and expansion into existing workloads, is strengthening its competitive position. The company also raised its fiscal 2027 revenue guidance to $7.98-$8.23 billion, indicating confidence in sustained business momentum.
The company is benefiting from accelerating adoption of all-flash storage solutions as enterprises prioritize high-performance infrastructure for mission-critical applications and AI workloads. All-flash array revenues jumped 47% year over year to $1.31 billion in the fiscal first quarter. Demand for storage solutions supporting GPU-intensive AI pipelines, advanced analytics and cybersecurity resilience remains encouraging. NetApp also witnessed renewed interest in hybrid flash offerings as customers seek cost-effective infrastructure solutions. Its broad portfolio and flexible architecture are helping it displace competitors, capture additional workloads and strengthen customer relationships.
NetApp is gaining from expanding opportunities in AI infrastructure as enterprises transition from experimentation to production-scale deployments. During the fiscal first quarter, the company secured approximately 350 AI and data lake modernization deals, with increasing deal sizes indicating stronger customer commitments. Significant agreements with Samsung Electronics, public-sector organizations and neocloud providers highlight growing adoption of its AI-ready solutions. Moreover, the acquisition of DataPelago enhances NetApp's ability to process enterprise data without unnecessary movement, strengthening its capabilities in AI analytics and inference.
The company is benefiting from sustained momentum in its public cloud and subscription-based storage businesses. Public cloud revenues increased 28% year over year to $206 million, supported by growing adoption of first-party and marketplace storage services. Excluding the additional week, growth was 19%. Rising enterprise migrations, particularly VMware workloads moving to hyperscale cloud environments, are creating incremental opportunities. The acquisition of JetStream further strengthens NetApp's cloud disaster recovery capabilities, while robust demand for its Keystone storage-as-a-service offering supports recurring revenue opportunities.
NetApp's disciplined execution and improving operating leverage are strengthening profitability and cash generation. First-quarter non-GAAP operating margin expanded 610 bps year over year to 31.9%, while non-GAAP earnings surged 66% to $2.58 per share. Free cash flow reached $401 million, supporting shareholder returns of $302 million through dividends and repurchases. The company also raised its fiscal 2027 non-GAAP earnings guidance to $9.73-$10.03 per share, reflecting expectations of continued earnings growth.
However, NetApp is grappling with rising component costs and an unfavorable revenue mix, which could pressure profitability. First-quarter non-GAAP gross margin contracted 50 bps year over year to 70.6%, while product gross margin declined 150 bps sequentially to 54.6%. Management expects second-quarter gross margin to decline further to 67-68%, primarily due to a higher product revenue mix. Rising operating expenses and inventory levels also warrant attention. Although pricing actions are helping offset cost inflation, persistent component pricing pressures could constrain margin expansion.
Share Performance for QMCO & NTAP
In the past month, QMCO’s shares have lost 34.8%, while NTAP shares gained 1.6%.
Image Source: Zacks Investment Research
Valuation for QMCO & NTAP
In terms of Price/Sales forward F12M, QMCO shares are trading at 2.17X, lower than NTAP’s 5.07X.
Image Source: Zacks Investment Research
How Do Zacks Estimates Compare for QMCO & NTAP?
For the current year, earnings estimates for QMCO’s bottom line have remained unchanged.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NTAP’s earnings for the current year has been revised upward over the past 60 days.
Image Source: Zacks Investment Research
QMCO or NTAP: Which Stock is the Better Pick?
While QMCO carries a Zacks Rank #3 (Hold) at present, while NTAP has a Zacks Rank #1 (Strong Buy). Consequently, in terms of Zacks Rank, NTAP seems to be a better pick at the moment.
View the Zacks #1 Rank List
Image: Bigstock
Quantum vs. NetApp: Which Data Storage Stock is the Better Buy?
Key Takeaways
Quantum Corporation (QMCO - Free Report) and NetApp, Inc. (NTAP - Free Report) are two players in the data storage industry, helping enterprises address growing data volumes, infrastructure complexity and evolving storage requirements. Quantum focuses on delivering efficient, resilient and cost-effective data storage solutions through its ActiveScale and tape storage portfolio. The company is witnessing growing demand from enterprise and hyperscale customers seeking to optimize storage costs, reduce power consumption and strengthen cyber resilience.
Meanwhile, NetApp offers a unified data infrastructure platform spanning all-flash and hybrid storage, public cloud and storage-as-a-service solutions. Its offerings help enterprises modernize data infrastructure, accelerate AI adoption and manage workloads across hybrid multicloud environments.
Both companies are benefiting from rising demand for data storage infrastructure, supported by expanding AI workloads, cloud adoption and enterprise modernization initiatives. Quantum is gaining traction from its expanding ActiveScale deployments, larger enterprise deals and growing tape storage opportunities, although supply constraints remain a challenge. NetApp is witnessing strong momentum across its all-flash, public cloud and AI-related businesses, supported by new customer wins and strategic investments.
With both companies pursuing growth opportunities in the evolving data storage market, investors may wonder which stock offers a more compelling investment proposition. Let us take a closer look at their fundamentals, growth prospects and challenges to determine which is the better buy.
The Case for QMCO
Quantum is gaining from robust demand for its data storage solutions as enterprises increasingly focus on managing growing data volumes, reducing infrastructure costs and improving power efficiency. In the first quarter of fiscal 2027, revenues increased 25.7% year over year to $80.8 million, exceeding management's guidance. Revenues in the Americas and APAC regions grew more than 20% and 50% sequentially, respectively. The company also witnessed approximately 10% sequential growth in service revenues, signaling stabilization after several years of decline. These trends highlight improving business momentum across enterprise and cloud environments.
The company is benefiting from growing adoption of its ActiveScale and tape storage solutions. Its tape opportunity pipeline reached its highest level in years, supported by increasing customer interest in cost-efficient and cyber-resilient storage infrastructure. Quantum witnessed a substantial increase in deals exceeding $1 million, with most valued above $3 million. Notable wins included an ActiveScale renewal and expansion with a leading European biometrics institution and a significant Scalar i7 deployment with an APAC hyperscaler, valued well above eight figures. Expanding customer relationships and larger deal sizes strengthen its growth prospects.
Quantum's profitability is improving, supported by stronger pricing, restructuring benefits and disciplined cost management. GAAP gross margin expanded 360 basis points (bps) sequentially to 39.3%, its highest level in five quarters. Non-GAAP operating expenses declined 16% year over year to $25.1 million despite higher revenues. Adjusted EBITDA was $8 million against a loss of $6.5 million in the year-ago quarter. The company also generated non-GAAP net income of $4 million versus a loss of $14.5 million a year earlier, reflecting improving operating leverage.
Quantum's strengthened balance sheet provides additional financial flexibility. Following its private placement and debt repayment, the company eliminated its outstanding debt compared with $144.8 million at fiscal 2026-end. Cash, cash equivalents and restricted cash increased to $54.6 million from $16.2 million. The elimination of debt should significantly reduce interest expenses, supporting future profitability and cash flow generation.
Quantum Corporation Price, Consensus and EPS Surprise
Quantum Corporation price-consensus-eps-surprise-chart | Quantum Corporation Quote
However, Quantum is grappling with persistent supply-chain constraints that continue to restrict its ability to fulfill strong customer demand. Limited availability of tape drives and certain disk drives is delaying potential revenue conversion despite increasing backlog and bookings. Management indicated that tape drive supply had shown little improvement through August 2026. Continued component shortages and pricing volatility could constrain revenue growth and pressure margins.
The company also faces near-term profitability headwinds from rising operating expenses and uncertainty surrounding large deals. Management expects second-quarter fiscal 2027 non-GAAP operating expenses of approximately $27 million compared with $25.1 million in the preceding quarter, reflecting higher sales commissions and increased R&D hiring. Consequently, adjusted EBITDA is projected to decline sequentially to $6 million despite anticipated revenue growth to approximately $82 million.
Additionally, Quantum reported a substantial GAAP net loss of $155.3 million in the first quarter, primarily reflecting $157.7 million in non-cash debt-related charges. Although these charges were largely one-time in nature, the significant reported loss underscores the volatility in its financial results.
The Case for NTAP
NetApp is gaining from robust demand for AI-driven data infrastructure, cloud storage and enterprise modernization solutions. In the first quarter of fiscal 2027, revenues surged 30% year over year to $2.03 billion, reflecting broad-based strength across customer segments, industries and geographies. Excluding the benefit of an additional week, revenues increased 26%. Growing adoption of its unified data platform, coupled with new customer acquisitions and expansion into existing workloads, is strengthening its competitive position. The company also raised its fiscal 2027 revenue guidance to $7.98-$8.23 billion, indicating confidence in sustained business momentum.
The company is benefiting from accelerating adoption of all-flash storage solutions as enterprises prioritize high-performance infrastructure for mission-critical applications and AI workloads. All-flash array revenues jumped 47% year over year to $1.31 billion in the fiscal first quarter. Demand for storage solutions supporting GPU-intensive AI pipelines, advanced analytics and cybersecurity resilience remains encouraging. NetApp also witnessed renewed interest in hybrid flash offerings as customers seek cost-effective infrastructure solutions. Its broad portfolio and flexible architecture are helping it displace competitors, capture additional workloads and strengthen customer relationships.
NetApp is gaining from expanding opportunities in AI infrastructure as enterprises transition from experimentation to production-scale deployments. During the fiscal first quarter, the company secured approximately 350 AI and data lake modernization deals, with increasing deal sizes indicating stronger customer commitments. Significant agreements with Samsung Electronics, public-sector organizations and neocloud providers highlight growing adoption of its AI-ready solutions. Moreover, the acquisition of DataPelago enhances NetApp's ability to process enterprise data without unnecessary movement, strengthening its capabilities in AI analytics and inference.
The company is benefiting from sustained momentum in its public cloud and subscription-based storage businesses. Public cloud revenues increased 28% year over year to $206 million, supported by growing adoption of first-party and marketplace storage services. Excluding the additional week, growth was 19%. Rising enterprise migrations, particularly VMware workloads moving to hyperscale cloud environments, are creating incremental opportunities. The acquisition of JetStream further strengthens NetApp's cloud disaster recovery capabilities, while robust demand for its Keystone storage-as-a-service offering supports recurring revenue opportunities.
NetApp's disciplined execution and improving operating leverage are strengthening profitability and cash generation. First-quarter non-GAAP operating margin expanded 610 bps year over year to 31.9%, while non-GAAP earnings surged 66% to $2.58 per share. Free cash flow reached $401 million, supporting shareholder returns of $302 million through dividends and repurchases. The company also raised its fiscal 2027 non-GAAP earnings guidance to $9.73-$10.03 per share, reflecting expectations of continued earnings growth.
NetApp, Inc. Price, Consensus and EPS Surprise
NetApp, Inc. price-consensus-eps-surprise-chart | NetApp, Inc. Quote
However, NetApp is grappling with rising component costs and an unfavorable revenue mix, which could pressure profitability. First-quarter non-GAAP gross margin contracted 50 bps year over year to 70.6%, while product gross margin declined 150 bps sequentially to 54.6%. Management expects second-quarter gross margin to decline further to 67-68%, primarily due to a higher product revenue mix. Rising operating expenses and inventory levels also warrant attention. Although pricing actions are helping offset cost inflation, persistent component pricing pressures could constrain margin expansion.
Share Performance for QMCO & NTAP
In the past month, QMCO’s shares have lost 34.8%, while NTAP shares gained 1.6%.
Image Source: Zacks Investment Research
Valuation for QMCO & NTAP
In terms of Price/Sales forward F12M, QMCO shares are trading at 2.17X, lower than NTAP’s 5.07X.
Image Source: Zacks Investment Research
How Do Zacks Estimates Compare for QMCO & NTAP?
For the current year, earnings estimates for QMCO’s bottom line have remained unchanged.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NTAP’s earnings for the current year has been revised upward over the past 60 days.
Image Source: Zacks Investment Research
QMCO or NTAP: Which Stock is the Better Pick?
While QMCO carries a Zacks Rank #3 (Hold) at present, while NTAP has a Zacks Rank #1 (Strong Buy). Consequently, in terms of Zacks Rank, NTAP seems to be a better pick at the moment.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.