TLDRs
- NetApp surged after earnings beat driven by AI storage demand.
- Strong cloud growth and guidance boosted investor sentiment significantly.
- All-flash storage and AI workloads fueled quarterly revenue expansion.
- Margin pressures persist despite upbeat outlook and cloud partnerships.
NetApp (NTAP) shares jumped roughly 13% in after-hours trading on Thursday, climbing to nearly $161 after the company delivered a stronger-than-expected quarterly performance. The storage and cloud infrastructure firm beat Wall Street forecasts on both revenue and earnings, signaling continued strength in enterprise demand tied to artificial intelligence and cloud computing workloads.
The stock had closed the regular trading session slightly lower at $142.40, down 0.24%, before reversing sharply after the earnings release. The move highlights how quickly sentiment shifted once investors digested the company’s results and forward guidance.
AI Demand Drives Growth
A major driver behind the earnings beat was accelerating demand for AI-related storage infrastructure. NetApp executives emphasized that enterprise AI adoption is increasingly shifting focus away from raw computing power toward data management, particularly the handling of unstructured data such as documents, images, and training datasets used in large AI models.
CEO George Kurian described the current period as a “landmark year,” noting that AI is reshaping how enterprises invest in infrastructure. Instead of prioritizing only chips and compute systems, companies are now expanding spending into data storage layers, where NetApp operates.
This shift is helping position the company as a key beneficiary of the broader AI infrastructure boom.
Strong Revenue Momentum
For the fiscal fourth quarter, NetApp reported revenue of $1.95 billion, marking a 12% increase compared to the same period last year. Adjusted earnings per share came in at $2.43, beating analyst expectations that had forecast $2.27 per share on $1.87 billion in revenue.
Growth was particularly strong in all-flash storage systems, where net revenue reached a record $1.2 billion, rising 18% year-over-year. This segment reflects rising enterprise demand for faster, more efficient storage solutions that can support AI workloads and large-scale cloud applications.
Meanwhile, NetApp’s public cloud revenue rose 11% to $182 million, underscoring continued expansion in its cloud-based storage services.
Cloud Partnerships Boost Outlook
NetApp’s forward guidance also reinforced investor optimism. The company projected fiscal 2027 revenue between $7.325 billion and $7.575 billion, alongside adjusted earnings per share of $8.70 to $9.00. For the upcoming July quarter, it expects revenue between $1.75 billion and $1.90 billion, with earnings per share projected at $2.05 to $2.15.
CFO Wissam Jabre highlighted a multi-year partnership with Google Cloud as a key contributor to recent strength, noting that cloud alliances are increasingly central to NetApp’s growth strategy. These partnerships are helping the company secure recurring demand as enterprises continue migrating workloads to hybrid and multi-cloud environments.
Margin Pressures Remain in Focus
Despite the upbeat results, management cautioned that cost pressures remain a challenge. Rising memory and component costs are weighing on margins across the storage industry, and NetApp has responded by negotiating with suppliers and adjusting pricing strategies.
However, executives acknowledged the risk that customers could resist price increases, particularly large enterprise buyers. If demand softens or pricing power weakens, margins could come under pressure, potentially impacting future profitability and long-term forecasts.
Investors will now turn their attention to how the stock behaves in Friday’s regular trading session, as analysts update their models to reflect stronger-than-expected AI-driven demand and evolving cloud infrastructure trends.
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