Pure Storage stock soared to record highs Thursday after the company posted stronger-than-expected fiscal second-quarter results. Meanwhile, shares of rival enterprise data storage firm NetApp are wavering after the company failed to offer similar upside to Wall Street's forecast in its quarterly results.
Pure Storage said in a late Wednesday news release that it earned an adjusted 43 cents per share on sales of $861 million for its fiscal second quarter, which ended Aug. 3. Analysts were expecting earnings of 39 cents per share and sales of $846 million, according to FactSet. Pure Storage stock is ahead more than 28% at 78.52 in recent trading on the stock market today.
NetApp, meanwhile, reported adjusted earnings of $1.55 per share on sales of $1.56 billion for its fiscal first quarter ended July 25. Analysts were expecting earnings of $1.54 per share from sales of $1.55 billion. NetApp stock is is ahead by 2% at 114.24 in recent trading. Shares opened lower before recovering.
Mountain View, Calif.-based Pure Storage offers flash-based data storage hardware, as well as software tools to manage data storage. San Jose, Calif.-based NetApp offers flash memory and standard disk storage, as well as a broader storage software platform.
For the current three-month period, Pure Storage told investors it expects $955 million in sales at the midpoint of its range. That was ahead of previous forecasts of $913 million. NetApp guided for a midpoint of $1.69 billion in October-ending quarter sales, compared to analyst estimates of $1.68 billion.
Pure Storage Stock Gains On Bump For Annual Guidance
Pure Storage raised its guidance for total fiscal year revenue and earnings. The company said it expects sales of $3.615 billion at the midpoint of its range for its January-ended fiscal year. That's up from previous guidance of $3.515 billion.
William Blair analyst Jason Ader said the results "instill greater investor confidence in the company's ability to sustain durable enterprise share gains, monetize hyperscaler engagements, and capitalize on rising AI-driven demand." Ader rates Pure Storage stock as outperform.
Facebook parent company Meta Platforms revealed in March that it was working with Pure Storage to use the company's DirectFlash storage for some of its data center designs. A key focus for Pure Storage is expanding its flash storage offerings into more data centers operated by cloud hyperscalers like Meta. That market is dominated by traditional hard-disk drives.
"Our relationship with Meta continues to advance, and we continue to see increased interest from other hyperscalers looking to replace both hard-disk and SSD based environments with our DirectFlash technology," Pure Storage Chief Financial Officer Tarek Robbiati told analysts on a Wednesday conference call, according to a FactSet transcript.
Pure Storage's 13% revenue growth for the quarter was a slight acceleration from the 12% year-over-year rate it posted in its April-ended quarter. Adjusted earnings decreased 2%, compared to a 9% decline in its fiscal Q1.
NetApp Stock Falls
For its part, NetApp reiterated guidance it provided during its previous quarterly report. The company expects sales of $6.75 billion for the April-ending fiscal year at the midpoint of its range.
Wedbush analyst Matt Bryson told clients late Wednesday that investors expected "more meaningful upside vs. expectations, with consensus having been influenced by what looked to be a very cautious guide."
The company also slightly missed expectations for gross margin on its product sales, Bryson noted. Bryson is neutral on NetApp stock.
NetApp Chief Executive George Kurian told analysts Wednesday that there is still some "macro-related spending caution" among enterprises. But AI is helping drive overall market growth.
"The emerging enterprise AI market is driving urgency among customers to modernize data infrastructure," Kurian said, according to a FactSet transcript.
NetApp's 1% revenue growth for the quarter was a slowdown from the 4% year-over-year rate the company posted in its April-ended quarter. Adjusted earnings decreased 1%, compared to a 7% increase in its previous quarter.
NetApp Stock Vs Pure Storage Stock
Shares of both companies have been on-and-off AI stocks in recent years. Pure Storage rallied nearly 80% last year while NetApp gained over 30% in 2024. But both stocks recording rocky years overall heading into Wednesday's reports, on concerns about tariffs and overall competition in data storage hardware. Pure Storage stock was down 1% year to date while NetApp was down 2% on the year.
Now, Pure Storage stock's huge jump is erasing its year-to-date loss and returning the stock to a record high. The current record high close for Pure Storage stock is 72.37 on Jan. 23 of this year. A gain of more than 27% would also be Pure Storage's highest-ever jump in a single trading day, according to Dow Jones Market Data.
Coming into the report, NetApp stock had an IBD Composite Rating of 66 out of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Meanwhile, Pure Storage stock had an IBD Composite Rating of 77.
