NetApp Beats Earnings Estimates, So Why Did Nvidia Partner’s Shares Fall So Much?

Key conclusions

NetApp’s quarterly sales and profit beat estimates, but shares of the data infrastructure company fell on Thursday.
Although NetApp reported significant growth in sales of its all-flash memory products, the company acknowledged that macroeconomic uncertainty was negatively impacting IT spending.
The decline in NetApp shares following the earnings announcement marked a reversal from the strong results seen this year.

Storage provider NetApp (NTAP) reported better-than-expected sales and profit results in the first quarter of its fiscal year, but its shares fell nearly 10% on Thursday.

NetApp shares were up 50% in 2024 ahead of the earnings report, fueled by high expectations for artificial intelligence (AI). But the latest quarterly report may not have been enough to convince investors that NetApp can maintain its growth trajectory.

NetApp also expressed caution over macroeconomic uncertainty affecting IT spending.

Quarterly highlights

For the three months ended July 26, the data infrastructure company posted revenue of $1.54 billion, up 8% year over year. GAAP net income per share was $1.17, up from 69 cents a year earlier. Both numbers exceeded consensus forecasts.

“We started fiscal year 2025 on a high note,” said George Kurian, NetApp’s CEO, in a press release accompanying the quarterly results. The CEO said the company’s results reflect “unwavering confidence in the customer benefits of NetApp’s highly differentiated intelligent data infrastructure platform.”

The company’s all-flash array products—a storage architecture that relies solely on flash memory rather than hard drives—contributed to its results. Annual all-flash array net revenue of $3.4 billion was up 21% year over year.

Macroeconomic concerns

Despite the strong growth rates, NetApp said the uncertain macroeconomic environment remains a headwind, causing customers to curtail IT spending. But Chief Financial Officer Mike Berry said in prepared remarks that NetApp’s offerings are aligned with customer investment priorities and that the company is poised for innovation-driven growth this fiscal year.

Following the earnings report, Bank of America raised its price target for NetApp shares to $110 per share — still about 8% below current levels. Analysts say macro delays in data storage spending remain a risk for the stock.

NetApp released its results on the same day as AI chip giant Nvidia’s (NVDA) latest earnings report. NetApp partner Nvidia also beat estimates, but a slowdown in growth dragged shares lower and raised concerns about the durability of the AI boom.