To The Moon

$NetApp(NTAP)$ is expected to release its fiscal Q2 2026 earnings on Tuesday, November 25, 2025, after the market closes.

Fiscal Q2 2026 Earnings Analysis

The general consensus suggests a modest year-over-year increase for both revenue and EPS, building on the company's focus on its flash and cloud storage portfolios.

Positive Tailwinds: The company is strategically focused on high-growth areas like All-Flash Arrays and enterprise AI solutions. Strong demand in these areas, coupled with hyperscaler partnerships (Amazon, Microsoft), is expected to be a primary driver of performance.

Recent EPS History: NTAP has a history of generally beating or meeting consensus EPS estimates, but it did miss the consensus estimate in the prior quarter (Q1 2026).

Macroeconomic Headwinds: Continued uncertainty in the global macroeconomic environment, including inflation, could still weigh on overall enterprise IT spending, which remains a risk.

NetApp (NTAP) Fiscal Q1 2026 Earnings Summary

NetApp reported its financial results for the first quarter of fiscal year 2026 (ended July 25, 2025) on August 27, 2025. The company delivered a "solid start" to the fiscal year, with key metrics slightly beating market expectations.

Key Financial Highlights (Non-GAAP)

Strategic and Operational Highlights

All-Flash Strength: All-Flash Array (AFA) revenue grew 6% year-over-year, reaching an annualized run rate (ARR) of $3.6 billion. The company achieved the #1 market share position in All-Flash storage for the prior calendar quarter.

Cloud Growth and Margins: Revenue from first-party and marketplace Public Cloud storage services grew significantly at 33% year-over-year. Excluding the impact of the previously divested Spot business, the total Public Cloud revenue grew 18% YoY. Most notably, the Public Cloud Gross Margin saw a dramatic increase, prompting NetApp to raise its long-term target range for this segment to 80-85%.

Financial Discipline: The company showed impressive cash generation, setting record Q1 metrics for cash flow from operations ($673 million) and free cash flow ($620 million).

Geographic Mix: Strong performance in the Americas enterprise segment helped offset continued softness observed in the U.S. Public Sector and EMEA regions.

AI Focus: Management highlighted success in closing approximately 125 AI infrastructure and data lake modernization deals, positioning NetApp to capitalize on the emerging enterprise AI opportunity.

Lesson Learned from the Q1 2026 Guidance

The main lesson from NetApp's guidance following Q1 is a clear signal to investors: Top-line growth remains modest, but profitability and strategic execution are the new primary value drivers.

1. The Pivot to Profitability (Margin Focus)

The Lesson: The company is managing to extract significantly higher margins from its strategic cloud business, even as overall revenue growth remains constrained. This suggests that efficiency and profitability will drive shareholder value more than sheer revenue volume in the near term.

Evidence: The dramatic increase in Public Cloud gross margin and the subsequent decision to raise the long-term gross margin target to $80-85% is a massive indicator that cost management and strategic pricing are highly successful.

2. Strategic Growth is Uneven (Focus on the Quality of Revenue)

The Lesson: Investors should pay less attention to the overall Total Revenue number and more to the specific segmental growth rates, as the business is in a transition.

Evidence: The overall revenue growth was just 1.2% (or 3% excluding divested business), which is still low. However, growth in the two most important segments was strong:

• All-Flash ARR: +6% YoY.

• First-Party Cloud Services: +33% YoY.

This teaches that the legacy (non-flash/HDD) part of the business continues to be a drag, but the strategic transition to All-Flash and Cloud is making steady progress and is responsible for the company's financial health.

3. Cautious but Stable Outlook

The Lesson: Management remains prudent about the overall macroeconomic environment, suggesting that enterprise IT spending is still cautious.

Evidence: The full-year revenue guidance ($6.625 Billion to $6.875 Billion) implies a modest ~3% growth at the midpoint for the fiscal year. By reaffirming (not raising) the full-year revenue and EPS guidance, NetApp signaled that while Q1 was solid, they are not yet seeing a major loosening of enterprise spending constraints, especially in historically volatile areas like the U.S. Public Sector and EMEA.

Key Metrics Investors Should Watch

Investors should look beyond the headline revenue and EPS figures to assess the health and growth trajectory of NetApp's strategic focus areas:

1. Public Cloud & Cloud Storage Services Growth

This is critical for NetApp's transition and future growth.

• Public Cloud Segment Revenue: Analysts expect this to be around $174.8 Million (a roughly +4.1% YoY increase). Any significant acceleration or deceleration here will likely move the stock.

• First-Party and Marketplace Cloud Storage Services: Focus on the growth rate of this sub-segment. Strong year-over-year growth (it was 33% in the prior quarter, excluding divested Spot business) indicates success in migrating customers to cloud-native offerings.

2. All-Flash Array (AFA) Annualized Revenue Run Rate (ARR)

AFA ARR is a crucial indicator of the stickiness and success of NetApp's core hardware business transformation.

• AFA ARR: Look for continued growth. The ARR was reported at $3.6 billion in the prior quarter (Q1 FY26). Strength here indicates successful displacement of competitors and high-value product sales.

3. Margin Performance

Given the low revenue growth expectations, profitability and efficiency are paramount.

Gross Margins (Product & Services): Any variance, particularly in the Product Non-GAAP Gross Margin (estimated around 56.5%, down from 60.3% YoY), could reflect changes in pricing, competition, or component costs. An improvement in Services Gross Margin (estimated around 83.3%) would be a positive sign.

Non-GAAP Operating Margin: High-teens to low-20s is a key focus area. Better-than-expected margin performance often signals strong cost control and pricing power.

4. Full-Year 2026 Guidance

The company's outlook is often a bigger catalyst than the quarterly results themselves.

• FY 2026 EPS and Revenue Guidance: Any revision (upward or downward) to the full-year guidance will likely determine the stock's short-term reaction. The current full-year EPS guidance is in the range of $7.60 to $7.90.

NetApp (NTAP) Price Target

Based on 14 analysts from Tiger Brokers app offering 12 month price targets for NetApp in the last 3 months. The average price target is $119.94 with a high forecast of $140.00 and a low forecast of $100.00. The average price target represents a 11.78% change from the last price of $107.30.

Short-Term Trading Opportunity Post-Earnings

Trading post-earnings is highly speculative, as the market's reaction is often based on the guidance and the performance of key strategic metrics, rather than just the headline numbers.

Upside Potential (Bullish Case): A strong beat on Public Cloud revenue growth and All-Flash ARR, combined with an increase in full-year guidance, would likely lead to a significant positive move. The market would view this as successful execution in high-growth areas.

Downside Risk (Bearish Case): If the company misses on key strategic metrics (Cloud/AFA growth) or provides disappointing guidance, especially in the face of ongoing macro uncertainty, the stock could decline sharply. An earnings miss in the prior quarter suggests the stock may be more sensitive to negative news.

Historical Pattern: Historically, NTAP shares have had a positive one-day return following earnings about 60% of the time over the past five years, with a median positive move of 4.4%. However, this dropped to 45% over the last three years, suggesting recent uncertainty.

Key Trading Note: Given the relatively low expected growth rate and mixed analyst sentiment (currently holding a Zacks Rank #4, or Sell), a strong catalyst is needed for a significant upward move. Traders should look for a substantial positive surprise in the core growth drivers (AFA/Cloud) to justify a short-term long position.

Technical Analysis - Exponential Moving Average (EMA)

We are seeing how NTAP stock price performance have been affected by the recent AI bubbles narrative as well as broad market selloffs, and NTAP is now trading in a negative RSI momentum, and the share price is trading below the 200-day period on daily chart.

This would show that NTAP would be affected if there is any volatility faced by some of the major tech names, which they could be partners, customers. So would NTAP earnings show us that there is actually still quality growth from their cloud and AFA?

And can the marketplace cloud storage services would be able to show significant growth as companies start to move models for inference? I will be watching closely as the cloud storage services business would be a strong complement for AI implementation in terms of CAPEX spending might be reduced, and companies might switch to OPEX spending.

Summary

NetApp is scheduled to report its fiscal Q2 2026 earnings on November 25, 2025, after market close. Expectations are modest, with consensus calling for:

• Non-GAAP EPS: $1.89 (a slight +1.1% YoY increase).

• Net Revenue: $1.69 Billion (a +1.7% YoY increase).

Key Metrics for Investors:

The focus remains on NetApp's transition away from legacy storage to high-growth areas. Investors should monitor:

All-Flash Array (AFA) Growth: Continued momentum in AFA sales, particularly the C-series and ASA block-optimized flash, is vital. Look for updates on the $3.6 billion annualized run rate (ARR) from Q1.

Public Cloud Revenue: This segment's growth rate is a key future indicator. Consensus estimates $174.8 million (+4.1% YoY), but the underlying first-party and marketplace cloud storage services growth (33% in Q1) is the better measure of strategic success.

Product Gross Margin: Analysts forecast a drop to around 56.5% from 60.3% YoY. Any beat here would signal strong pricing power and cost management.

Short-Term Trading Opportunity:

Trading will be less about the headline numbers and more about future guidance and strategic growth execution.

• Bullish Catalyst: A strong beat in AFA and Public Cloud growth, coupled with a confident raise to full-year 2026 guidance, would likely lead to a significant short-term rally.

• Bearish Risk: Low revenue growth combined with a cautious outlook (no raise to guidance) could weigh on the stock, especially since NTAP currently carries a less favorable Zacks Rank #4 (Sell) rating.

In short, investors are looking for quality growth (Cloud & AFA) and profitability over just volume.

Appreciate if you could share your thoughts in the comment section whether you think NTAP would be able to turn profitability if the volume of its marketplace cloud storage services grow as companies might switch to OPEX spending instead of CAPEX spending?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.