NTAP - NetApp: A Long-Term Beneficiary Of AI

2024-05-14 08:01:48 ET

Summary

• NetApp's stock reaches a new high, driven by optimism about opportunities in artificial intelligence.
• This contrasts with what analysts predict as topline estimates for the fiscal year which ends in April this year, and there is also competition for AI-ready storage.
• On the other hand, margins are on the rise and it should benefit from sales of higher-performance disks as corporations try to match the speed of their storage with Nvidia's accelerator GPUs.
• In this respect, the company benefits from a huge installed base.
• There are short-term volatility risks but the company should be a longer-term beneficiary of artificial intelligence.

NetApp's ( NTAP ) stock has reached a new high of $109, last reached in October 2000. This was after an 18% upside at the end of February after its CEO expressed optimism about opportunities in artificial intelligence during the earnings call for the third quarter of fiscal year 2024 (Q3). It is now trading at a forward price-to-sales multiple that exceeds the median for the IT sector by nearly 27%....

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