Image Source: Pixabay

In our AI Insights series, we recently featured NetApp (Nasdaq: NTAP) as a stock to consider, based on the inputs punched into ChatGPT.

Here’s what the chatbot spit out a couple of weeks ago on the stock.

A fresh, timely pick this week is NetApp (NTAP), a profitable enterprise data storage and cloud company with record fiscal 2025 operating metrics and a current Buy rating with a cited price target above the recent price, offering a clear AI‑driven demand angle without mega‑cap premiums.

This week, NetApp released its fiscal second quarter earnings and the results were strong, beating estimates. Is NetApp still a good buy after earnings? Let’s take a look.

Revenue and earnings beat

NetApp is not a household name by any stretch, but it has been a good stock over the years. It is a tech company that provides data storage, management, and infrastructure for enterprise customers, which is basically large companies. It also offers cloud solutions and storage for the major cloud computing companies including Amazon. Microsoft and Google.

It is not a market leader, but is a solid competitor behind major providers like Dell, Hewlett Packard, and IBM in the U.S.

In the fiscal second quarter, NetApp generated $1.7 billion in revenue, up 3% year-over-year and better than estimates. Billings were up 4% year-over-year.

Its all-flash array solid-state drive business made about $1 billion in revenue, a 9% increase. This is part of its larger hybrid cloud business, which also includes hard-disk drives as well as support and services revenue. The hybrid cloud segment grew 3% year-over-year.

The other smaller business is public cloud, where it provides cloud solutions for Amazon, Microsoft and Google. This business recorded about $171 million in revenue, up 2% year-over-year.

NetApp grew net income 2% to $305 million and earnings 6% to $1.51 per share. Adjusted earnings were $2.05 per share, which beat estimates of $1.89 per share. The company also logged a record-high operating margin of 23.4%.

Outlook and analyst upgrades

NetApp stock initially jumped about 7% to $120 per share after the earnings were released Tuesday, but after Wednesday’s open, it plummeted down to $107 per share, down about 4% on the day.  

It’s hard to figure out why it plummeted so sharply as NetApp not only beat earnings but raised its guidance for the full fiscal year. Specifically, NetApp lifted its guidance for EPS, operating margin, and gross margin, while maintaining its revenue guidance.

The only potential drawback is that the EPS estimate came in at the low end of analysts’ expectations.

NetApp stock also got several analyst upgrades after the earnings report, including from Barclays which raised its target to $134 per share and Northland which boosted it to $137 per share. BofA, Wells Fargo and UBS also raised their targets. Analysts cited solid revenue growth and margin expansion, among other reasons.

The median price target is $122.50, which is about 10% upside.

Is NetApp stock a buy?

NetApp stock is down 7% YTD and 17% over the past 12 months, but it has been a good long-term performer. Over the past 5 and 10-year periods, it has an average annualized return of 15% and 13%, respectively, which beat the S&P 500.

The stock looks good from a valuation standpoint too, with a P/E ratio of 19 and a forward P/E of just 14.

The selloff is a bit concerning, as it is not like the stock has been flying high and there’s massive profit taking. Some executives, including the CEO, sold shares of NetApp recently, in both September and November, so that’s worth noting.

Most signs point to this stock being a good value with solid earnings momentum, but the sudden selloff is a bit of a concern. Investors should put this one on their radar, but maybe hold off and look for more visibility and perhaps more feedback from analysts in the coming weeks.

More By This Author:

SoFi Becomes First U.S. Bank To Offer Crypto Trading
As Gambling Companies Pour Billions Into Ads, Is A Crackdown Looming?
Here’s Why Alphabet Stock Is Rising