NetApp Rises 46% in Six Months: Where Will the Stock Head From Here?

NetApp Inc’s NTAP shares have registered a gain of 45.5% in the past six months. However, this is much lower than the 109.2% growth of the Computer Storage Devices Industry. Over the same time frame, the Computer and Technology sector and the S&P 500 composite are up 45.8% and 27.5%, respectively.NTAP closed the session at $120.31, below its 52-week high of $135.45. This raises the question of whether this pullback signals a buying opportunity. Price PerformanceImage Source: Zacks Investment Research Let us carefully evaluate the key factors to determine the best course of action for your portfolio.Momentum Fueled by AI and FlashIncreasing demand for NetApp’s cloud storage and AI solutions bodes well. In the fiscal first quarter, the company won more than 125 AI and data lake modernization deals. The company expanded its AI ecosystem and launched a new AIPod Mini with Intel. This solution tackles the cost and complexity challenges of implementing AI at the department and team levels. It also completed the NetApp reference architecture for NVIDIA Cloud Partners. NetApp is witnessing higher demand from customers for its portfolio of modern all-flash arrays, including the C-series capacity flash and ASA block-optimized flash. The company expects the new AFF A-series, along with its C-series and ASA products, to capture further share in the all-flash market. Management highlighted that at the end of the first quarter of fiscal 2026, 45% of systems in its installed base under active support contracts are all-flash. All-Flash Array Business annualized net revenue run rate was $3.6 billion, up 6% year over year. Total billings rose 4% year over year to $1.5 billion.NetApp’s Keystone storage-as-a-service offering has been gaining significant traction. Keystone revenues grew 80% year over year in the fiscal first quarter. This led to an 18% jump in Professional Services revenues to $97 million. With $415 million in unbilled RPO (indicator for Keystone performance), up 40% year over year. The pipeline for Keystone remains robust.Solid momentum in hyperscaler first-party and marketplace storage services has been driving revenues from the Public Cloud. First-party and marketplace cloud storage services grew 33% in the fiscal first quarter. NetApp’s partnerships with major hyperscalers through offerings like Amazon FSx for NetApp ONTAP and Microsoft Azure NetApp Files solidify its position as a critical player in the cloud infrastructure space, which is poised for continued growth as enterprises migrate more workloads to the cloud.Healthy Cash Position to Keep Momentum GoingNetApp’s cash, cash equivalents and investments were $3.32 billion. Its long-term debt was $2.485 billion as of July 25, 2025. Net cash from operations was $673 million, while free cash flow was $620 million (with a margin of 39.8%). Net cash balance provides the required flexibility to pursue any growth strategy, whether through acquisitions or otherwise. A strong balance sheet helps NetApp continue its shareholder-friendly initiatives of dividend payouts.Strong Shareholders' Returns Plan in PlaceNTAP returned $404 million to its shareholders as dividend payouts and share repurchases in the fiscal first quarter. The company returned $300 million to its shareholders through share repurchases and distributed $104 million in dividends. NetApp returned $1.57 billion to its shareholders as dividend payouts and share repurchases in fiscal 2025.NTAP Faces HeadwindsManagement continues to expect spending caution amid an uncertain global macroeconomic outlook. Softness in the U.S. Public Sector and the EMEA weighed on the fiscal first-quarter results, with revenues increasing just 1% year over year. Fiscal 2026 revenues are forecasted to be in the range of $6.625-$6.875 billion. Storage cycles and infrastructure refreshes can be deferred if macro worsens, leading to top-line erosion. Stiff competition in the flash and cloud markets remains an additional headwind.NTAP’s Valuation & EstimatesNetApp’s forward 12-month price-to-earnings ratio of 14.72X is below the industry average of 23.16X observed in the past year. Image Source: Zacks Investment ResearchAnalysts have marginally revised earnings estimates upward for the current year.Image Source: Zacks Investment ResearchConclusion: Retain NTAPNetApp’s strong flash portfolio, growing Keystone adoption and deep partnerships with major hyperscalers serve as key long-term growth drivers, particularly across AI and cloud opportunities. The company’s solid balance sheet, healthy free cash flow generation and consistent shareholder returns further strengthen its case.That said, macroeconomic uncertainties, cautious enterprise spending and intense industry competition could constrain near-term gains.With a Zacks Rank #3 (Hold), NTAP appears best suited for existing investors to maintain their positions, while new investors can wait for a more attractive entry point ahead.Stocks to ConsiderSome better-ranked stocks from the broader technology space are Western Digital Corporation WDC, Seagate STX and Micron Technology MU, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for WDC’s fiscal 2026 EPS is pegged at $6.62, unchanged in the past seven days. WDC’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 6.77%. Its shares have increased 84.5% in the past year.The Zacks Consensus Estimate for STX’s fiscal 2026 earnings is pegged at $10.52 per share, unchanged in the past seven days. STX’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 6.99%. The share price has skyrocketed 101.9% in the past year.The Zacks Consensus Estimate for Micron’s fiscal 2026 EPS is pegged at $16.58. Micron’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 9.36%. Its shares have surged 79.9% in the past year.Zacks' Research Chief Picks Stock Most Likely to "At Least Double"Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren’t winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.See Our Top Stock to Double (Plus 4 Runners Up) >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NetApp, Inc. (NTAP): Free Stock Analysis Report Western Digital Corporation (WDC): Free Stock Analysis Report Seagate Technology Holdings PLC (STX): Free Stock Analysis Report Micron Technology, Inc. (MU): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks