NetApp (NTAP.US) benefits from the "storage super cycle" windfall! Performance and guidance surpass expectations, prompting major banks to raise their target price.

US data storage company NetApp (NTAP.US), which focuses on enterprise-level high-performance storage systems and data infrastructure platforms, announced better-than-expected performance and guidance, leading to a nearly 20% surge in the company's stock price in pre-market trading on Friday and receiving positive evaluations from several Wall Street banks. Barclays analyst Tim Long stated that NetApp achieved "comprehensive robust growth," highlighting profit margin expansion and a strong 12% year-over-year revenue growth, with public cloud business growing by 11% and hybrid cloud business growing by 13%. Long wrote in a report to clients, "The overall strong growth is mainly attributed to increased overall enterprise spending, strong demand momentum brought by customer transition to AI applications and use cases, and higher average selling prices (ASP) may also provide a boost." Long gave NetApp a "hold" rating and raised the target price from $134 to $199. Wedbush analyst Matt Bryson was more cautious but mentioned that the company's guidance may be conservative, suggesting a "pricing tailwind that should help boost revenue." Bryson stated, "Overall, we believe that NetApp's strong performance has largely been reflected in the substantial rise in its stock price throughout the quarter. Although given the company's guidance for accelerated growth (remind you, this guidance may still underestimate the actual performance NetApp could achieve), we are willing to use a mid-teens P/E ratio to value the stock, but we still find it difficult to find a reasonable basis for further upgrade requiring a higher valuation multiple." Bryson gave NetApp a "neutral" rating but raised the target price from $115 to $150. Morgan Stanley analyst Eric Woodrin described the earnings report as "strongly exceeding expectations and raising guidance," predicting that market estimates will continue to rise. While he believed that the stock's current trading level is close to historic highs, Woodrin acknowledged that demand from the artificial intelligence sector is improving. Woodrin gave NetApp an "underweight" rating but significantly raised the target price from $88 to $137. NetApp is not a storage chip original factory, but the company is taking advantage of the "storage super cycle" dividends brought about by the global AI data center expansion frenzy through enterprise-level storage systems, all-flash arrays, and cloud-based high-performance data storage services. Data shows that the company's revenue for the fourth quarter of FY2026 was approximately $19.48 billion, an increase of 12% year-on-year, significantly stronger than the market's expectations of around $18.5 billion. Adjusted earnings per share reached a record $2.43, an 11% year-over-year increase, significantly higher than the market's expectations of around $2.27. The strong growth in performance was mainly driven by accelerated growth in the all-flash array business and high-performance public cloud storage business. The revenue of the all-flash array business increased by 18% year-on-year to a record $1.22 billion, while the revenue of the public cloud business increased by 11% year-on-year to $182 million. At the same time, the billings from large cloud computing enterprises like Microsoft Corporation reached $2.163 billion, marking significant growth for ten consecutive quarters; the full-year billings reached a high of $7.206 billion. Moreover, the company's guidance for the first quarter and full year of FY2027 exceeded market expectations. The company expects revenue in the first quarter of FY2027 to be between $1.75 billion and $1.9 billion, with a midpoint of about $1.825 billion, significantly higher than the average analyst expectation of around $1.67 billion; it expects adjusted earnings per share for the first quarter to be between $2.05 and $2.15, significantly higher than the average analyst expectation of around $1.84. For FY2027, the company expects full-year revenue to be between $7.325 billion and $7.575 billion, and adjusted earnings per share to be between $8.70 and $9.00, both higher than the average analyst expectations of $7.19 billion and $8.50 respectively. NetApp's business focus is more on enterprise flash/enterprise NAND high-performance data storage platforms rather than enterprise DRAM. More accurately, NetApp itself does not produce DRAM or NAND chips like a storage chip original factory; its core products are enterprise storage systems and data infrastructure platforms; its high-growth business mainly relies on all-flash arrays, NVMe storage, object storage, and cloud file storage based on NAND flash as the lowest layer medium. Microsoft Corporation is one of NetApp's super-large-scale cloud partners/channel-type major customers. Azure NetApp Files is a first-party, fully managed enterprise file storage service on Microsoft Corporation's Azure cloud computing platform, supported by NetApp's technology; NetApp officially stated that Azure NetApp Files is a service fully managed by Microsoft Corporation and supported by NetApp storage capabilities. In addition to Microsoft Corporation's Azure, NetApp's key cloud partners/large customer ecosystem also includes two other super cloud computing giants - Amazon.com, Inc.'s Amazon FSx for NetApp ONTAP on AWS and Alphabet Inc. Class C's Alphabet Inc. Class C cloud super platform Google Cloud NetApp Volumes. Big customers seen in NetApp's official customer cases also include ASML Holding NV ADR, St. Luke's, Healius, Anaplan, Proximus NXT, covering semiconductor equipment, medical, enterprise software, telecommunications, and cloud migration, and many other end scenes.