Free Trial

NetApp Stock: Riding the AI Wave – Is It a Buy?

NetApp logo is displayed on a smartphone

Key Points

  • NetApp stock reached a 20-year high driven by AI-driven tailwinds.
  • NetApp provides intelligent data infrastructure solutions to public cloud service providers, including Amazon, Google, and Microsoft.
  • NetApp beat fiscal Q4 2024 EPS by a penny and authorized an extra $1 billion to its stock buyback program.
  • 5 stocks we like better than NetApp

NetApp Today

NetApp, Inc. stock logo
NTAPNTAP 90-day performance
NetApp
$126.22
+0.13 (+0.10%)
(As of 07/19/2024 ET)
52-Week Range
$70.82
$135.01
Dividend Yield
1.65%
P/E Ratio
27.20
Price Target
$117.81

Data infrastructure solutions provider NetApp Inc. NASDAQ: NTAP stock has hit 20-year highs. The company is reaping benefits from the artificial intelligence (AI) boom as data centers ramp up infrastructure to handle surging data demands and traffic. The company specializes in all-flash data storage and intelligent networking products and services. It helps automate and optimize data flow traffic management, implement zero-trust security models, and enhance the performance of on-premise and cloud infrastructure.

NetApp operates in the computer and technology sector with competitors Cisco Systems Inc. NASDAQ: CSCO, Palo Alto Networks Inc. NASDAQ: PANW, and Fortinet Inc. NASDAQ: FTNT.

What You Need to Know About NetApp's Hybrid Cloud and Public Cloud

NetApp operates in two segments: hybrid cloud and public cloud.

The public cloud offers services provided by a remote cloud service provider, who manages the infrastructure, including servers, storage, and the network. NetApp's well-known public cloud service provider (CSP) clients include Amazon.com Inc. NASDAQ: AMZN, Amazon Web Services (AWS), Alphabet Inc. NASDAQ: GOOGL, Google Cloud Platform (GCP) and Microsoft Co. NASDAQ: MSFT Azure.


These CSPs offer consumption model pricing, enabling their customers to easily scale resources and utilize services like computing power, databases, analytics, and storage. This is efficient and cost-effective for their customers, as they don’t have to maintain their own hardware or IT departments to handle the infrastructure. However, privacy and security are a concern for companies that have their data infrastructure residing with a third party. For this reason, many companies opt for a private cloud where the infrastructure is on-premise, which is resource-intensive.

A hybrid cloud combines public and private clouds. Companies use private clouds and on-premise infrastructure for critical data and applications while utilizing public cloud services for additional needs.

The public cloud is used for non-critical applications and workloads while providing additional scalable resources as needed. The hybrid cloud enables more control but comes with more complexity and higher costs.

NetApp NTAP stock chart

NTAP Stock May Be in a Parabolic Arc Pattern

The daily candlestick chart for NTAP demonstrates a potential parabolic arc pattern. Potential is the keyword since parabolic arcs are reversal patterns. They are comprised of an initial peak, a pullback, and then a steep price surge triggered upon breaking out through the peak. A parabolic arc precedes the reversal, forming upon exhaustion and resulting in a pullback towards the earlier peak. The daily relative strength index has remained above the overbought 70-band upon NTAP breaking out through its earlier peak at $108.82. Pullback support levels are at $123.57, $115.02, $108.82, and $104.93.

A Record-Breaking Quarterly Performance for NetApp

NetApp reported a solid fiscal Q4 2024 EPS beat by a penny with $1.80 versus $1.79 consensus analyst estimates. Revenues rose 5.5% to $1.67 billion, beating consensus estimates of $1.64 billion. The all-flash (memory) array annualized revenue run rate (ARR) surges 17% YoY to $3.6 billion. Fiscal GAAP consolidated gross margins hit a record 71%, and non-GAAP consolidated gross margins hit a record 72%. Fiscal GAAP net income per share was $4.63, and non-GAAP net income was a record $6.46 per share. The company increased its dividend to 52 cents and authorized an additional $1 billion stock buyback.

NetApp's In-Line and Raised Guidance

NetApp issued in-line fiscal Q1 2025 guidance with EPS of $1.40 to $1.50 versus $1.44 consensus estimates and revenues of $1.455 billion to $1.605 billion versus $1.53 billion consensus estimates.

NetApp raised fiscal full-year 2025 EPS guidance between $6.80 and $7.00, compared to the $6.74 consensus estimates. Revenue guidance was between $6.45 billion and $6.65 billion, compared to the $6.53 billion consensus estimates.

NetApp Investor Day 2024 Highlights

On June 11, 2024, NetApp had its annual Investor Day. NetApp’s CEO George Curian told investors that NetApp’s total addressable market (TAM) will expand to over $100 billion by 2027, comprised of $40 billion from all-flash, $27 billion from the public cloud, $14 billion from AI storage, and $27 billion from file and block storage.

NetApp MarketRank™ Stock Analysis
Overall MarketRank™
4.63 out of 5
Analyst Rating
Hold
Upside/Downside
6.7% Downside
Short Interest
Healthy
Dividend Strength
Moderate
Sustainability
-0.63
News Sentiment
1.15mentions of NetApp in the last 14 days
Insider Trading
Selling Shares
Projected Earnings Growth
8.96%
See Full Details

Analysts Were Impressed by NetApp

Susquehanna raised its price target to $155 from $138, maintaining its Positive rating on NTAP. Analysts noted that NetApp stands to benefit from $14 billion of AI market opportunity in 2027 from unstructured data driving generative AI business. NetApp enterprise data is 70% to 80% unstructured data. Stifel raised its price target to $180 from $130, citing EPS growth will be driven by gross margin expansion from a greater mix of cloud services, all-flash array, and share buybacks.

NetApp analyst ratings and price targets are at MarketBeat. 

→ Missed NVDA? Buy this AI stock NOW (From Chaikin Analytics) (Ad)

Should you invest $1,000 in NetApp right now?

Before you consider NetApp, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and NetApp wasn't on the list.

While NetApp currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

20 High-Yield Dividend Stocks that Could Ruin Your Retirement Cover

Almost everyone loves strong dividend-paying stocks, but high yields can signal danger. Discover 20 high-yield dividend stocks paying an unsustainably large percentage of their earnings. Enter your email to get this report and avoid a high-yield dividend trap.

Get This Free Report
Jea Yu
About The Author

Jea Yu

Contributing Author

Trading Strategies

Like this article? Share it with a colleague.

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
NetApp (NTAP)
4.6254 of 5 stars
4.63 / 5 stars
$126.22+0.1%1.65%27.20Hold$117.81
Cisco Systems (CSCO)
4.9026 of 5 stars
4.90 / 5 stars
$47.32-1.5%3.38%15.93Hold$56.47
Palo Alto Networks (PANW)
4.3764 of 5 stars
4.38 / 5 stars
$330.89+2.2%N/A48.09Moderate Buy$325.59
Fortinet (FTNT)
4.7614 of 5 stars
4.76 / 5 stars
$58.48+0.6%N/A38.22Hold$69.90
Amazon.com (AMZN)
4.9093 of 5 stars
4.91 / 5 stars
$183.13-0.3%N/A51.30Buy$218.82
Alphabet (GOOGL)
4.1443 of 5 stars
4.14 / 5 stars
$177.660.0%0.45%27.25Moderate Buy$200.44
Alphabet (GOOG)
4.2039 of 5 stars
4.20 / 5 stars
$179.39+0.1%0.45%27.51Buy$174.38
Microsoft (MSFT)
4.9137 of 5 stars
4.91 / 5 stars
$437.11-0.7%0.69%37.85Moderate Buy$484.94
Compare These Stocks  Add These Stocks to My Watchlist 


Featured Articles and Offers

Opportunities Arise as Stock Market Rotates from Big Tech

Opportunities Arise as Stock Market Rotates from Big Tech

Discover how the great stock rotation is shaking up the market and what it means for your investments, including the companies poised for growth.

Related Videos

3 Top Market Leaders Splitting Their Stocks
CPI News Breakdown: Key Market Moves to Follow
Inside Pelosi’s Latest Stock Moves

Stock Lists

All Stock Lists

Investing Tools

Calendars and Tools

Search Headlines