Pure Storage (PSTG) AI Stock Analysis

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Pure Storage

(NYSE:PSTG)

60Neutral

Pure Storage's strong financial performance and positive earnings call are offset by high valuation concerns and negative technical indicators. The stock's current overvaluation and technical weakness suggest caution, despite promising growth prospects.

Positive Factors

Design Wins

The META deal speaks to the power/density advantages of Pure's offerings, encouraging for potential expansion to other hyperscalers.

Product Portfolio Expansion

Pure Storage announced FlashBlade//EXA, a new system within the company's product portfolio specifically focused on AI environments.

Revenue Growth Potential

Pure exited F2025 with a total RPO balance totaling $2.618B, highlighting a growth in future revenue potential.

Negative Factors

Customer Reliance

Pure did not have any 10%+ customers in FY25, indicating a potential lack of significant individual customer reliance compared to FY24.

Market Uncertainty

With little detail of META ramp and other wins not expected to be imminent, analysts remain on the sidelines for now.

Pure Storage (PSTG) vs. S&P 500 (SPY)

Market Cap

$12.55B

Dividend YieldN/A

Average Volume (3M)3.61M

Price to Earnings (P/E)126.5

Beta (1Y)2.03

Revenue Growth11.92%

EPS Growth74.08%

CountryUS

Employees6,000

SectorTechnology

Sector Strength40

IndustryComputer Hardware

Share Statistics

EPS (TTM)0.30

Shares Outstanding326,022,520

10 Day Avg. Volume3,505,745

30 Day Avg. Volume3,610,788

Financial Highlights & Ratios

PEG Ratio1.71

Price to Book (P/B)N/A

Price to Sales (P/S)5.42

Price to Cash Flow (P/CF)43.00

P/FCF Ratio118.50

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$68.56

Price Target Upside77.20% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering17

Pure Storage Business Overview & Revenue Model

Company DescriptionPure Storage, Inc. provides data storage technologies, products, and services in the United States and internationally. The company's Purity software is shared across its products and provides enterprise-class data services, such as data reduction, data protection, and encryption, as well as storage protocols, including block, file, and object. Its products portfolio includes FlashArray for block-oriented storage, addressing databases, applications, virtual machines, and other traditional workloads; FlashArray//XL; and FlashArray//C, an all-QLC flash array. The company also provides FlashBlade, a solution for unstructured data workloads of various types; FlashStack that combines compute, network, and storage to provide an infrastructure platform; FlashRecover, an all-flash modern data-protection solution; and AIRI, a full-stack AI-ready infrastructure. In addition, it offers evergreen storage subscription, Pure as-a-Service, and Cloud Block Store, as well as Portworx a cloud-native Kubernetes data management solution It also offers technical and professional, training and education, and certification services. The company sells its products and subscription services through direct sales force and channel partners. The company was formerly known as OS76, Inc. and changed its name to Pure Storage, Inc. in January 2010. Pure Storage, Inc. was incorporated in 2009 and is headquartered in Mountain View, California.

How the Company Makes MoneyPure Storage makes money primarily by selling its flash storage hardware and software solutions to customers across various industries. The company's revenue model is based on a combination of product sales and subscription services. Product sales include its high-performance storage systems, while its subscription services encompass software and support offerings, such as the Evergreen Storage program, which provides customers with continuous updates and upgrades. Additionally, Pure Storage has strategic partnerships with major cloud service providers and technology companies, which help expand its market reach and contribute to its earnings. These partnerships often involve joint solutions and integrations that enhance the value proposition for enterprise customers.

Pure Storage Financial Statement Overview

Summary

Pure Storage shows strong financial health with significant revenue growth, improved profitability, and a stable balance sheet. However, there is room for improvement in operational efficiency.

Income Statement

Very Positive

Pure Storage has shown impressive revenue growth with an annual increase from $2.75 billion in 2023 to $3.17 billion in 2025. The gross profit margin is robust at 69.8%, indicating efficient cost management. The net profit margin has improved to 3.4% in 2025, showing profitability over previous losses. EBIT and EBITDA margins remain modest, suggesting room for operational efficiency improvements.

Balance Sheet

Positive

The company's debt-to-equity ratio stands at 0.21, indicating a low reliance on debt financing and a strong equity base. The return on equity (ROE) improved significantly to 8.2% in 2025 from previous years' losses, showing better profitability. The equity ratio is 33.0%, reflecting a solid capital structure with potential for leveraging growth.

Cash Flow

Positive

Operating cash flow increased steadily, reaching $753 million in 2025, which is a positive sign of cash generation capability. Free cash flow also grew, with a free cash flow to net income ratio of 4.93. However, the cash flow from financing activities is negative, indicating potential challenges in external financing or debt repayment.

Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Breakdown
Income Statement		Total Revenue
3.17B	2.83B	2.75B	2.18B	1.68B
	Gross Profit
2.21B	2.02B	1.90B	1.47B	1.15B
	EBIT
85.26M	53.55M	83.51M	-98.40M	-230.03M
	EBITDA
282.30M	222.49M	183.94M	-8.67M	-168.72M
	Net Income Common Stockholders
106.74M	61.31M	73.07M	-143.26M	-282.08M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.52B	1.53B	1.58B	1.41B	1.25B
	Total Assets
3.96B	3.66B	3.55B	3.14B	2.82B
	Total Debt
281.15M	272.25M	750.69M	915.36M	908.41M
	Net Debt
-442.43M	-430.28M	169.83M	449.16M	571.26M
	Total Liabilities
2.66B	2.39B	2.60B	2.38B	2.07B
	Stockholders Equity
1.31B	1.27B	941.23M	754.34M	750.01M
Cash Flow		Free Cash Flow
526.87M	482.56M	609.10M	307.84M	92.67M
	Operating Cash Flow
753.60M	677.72M	767.23M	410.13M	187.64M
	Investing Cash Flow
-218.20M	3.25M	-221.41M	-153.28M	-418.11M
	Financing Cash Flow
-509.78M	-560.24M	-431.17M	-127.79M	200.24M

Pure Storage Technical Analysis

Technical Analysis Sentiment

Negative

Last Price38.69

Price Trends

50DMA

56.16

Negative

100DMA

58.45

Negative

200DMA

57.15

Negative

Market Momentum

MACD

-3.14

Positive

RSI

32.47

Neutral

STOCH

8.89

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PSTG, the sentiment is Negative. The current price of 38.69 is below the 20-day moving average (MA) of 47.18, below the 50-day MA of 56.16, and below the 200-day MA of 57.15, indicating a bearish trend. The MACD of -3.14 indicates Positive momentum. The RSI at 32.47 is Neutral, neither overbought nor oversold. The STOCH value of 8.89 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PSTG.

Pure Storage Risk Analysis

Pure Storage disclosed 48 risk factors in its most recent earnings report. Pure Storage reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Pure Storage Peers Comparison

Overall Rating

UnderperformOutperform

Sector (57)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NTAP	69 Neutral	$15.71B	14.08	114.33%	2.67%	5.46%	23.49%
STX	68 Neutral	$14.54B	12.57	-109.27%	4.14%	24.17%	―
WDC	68 Neutral	$10.62B	7.43	13.99%	―	38.59%	―
DELL	63 Neutral	$49.99B	11.23	-179.12%	2.37%	7.84%	42.63%
HPQ	61 Neutral	$21.31B	8.12	84.33%	4.83%	1.03%	-18.56%
PSTG	60 Neutral	$12.55B	126.48	8.29%	―	11.92%	74.08%
Sector *	57 Neutral	$18.43B	9.69	-13.94%	2.74%	5.03%	-23.61%

* Technology Sector Average

Performance Comparison

PSTG

Pure Storage

38.69

-14.04

-26.63%

HPQ

21.88

-7.08

-24.45%

NTAP

NetApp

76.14

-26.04

-25.48%

STX

Seagate Tech

66.54

-20.44

-23.50%

WDC

Western Digital

31.55

-23.35

-42.53%

DELL

Dell Technologies

72.59

-49.31

-40.45%

Pure Storage Earnings Call Summary

Earnings Call Date: Feb 26, 2025 | % Change Since: -38.04% | Next Earnings Date: May 28, 2025

Earnings Call Sentiment Neutral

The earnings call presented a balanced view with significant achievements in revenue growth, technological advancements, and strategic wins. However, these were offset by challenges in gross margins due to NAND price increases, a decline in Evergreen//One sales, and geopolitical uncertainties. The sentiment reflects a cautious optimism with an acknowledgment of existing challenges.

Highlights

Record Revenue and Growth

Pure Storage surpassed $3 billion in total revenue for the first time, achieving $3.2 billion, representing a 12% growth year-over-year.

Evergreen//One TCV Sales Record

Quarterly TCV sales of Evergreen//One reached a record $140 million, marking a 20% increase.

Technological Advancements

The launch of Fusion v.2 has been positively received by customers, transforming enterprise data storage architectures into enterprise data clouds.

Hyperscale Design Win

Secured a design win with a top four hyperscaler, progressing well in testing and deployment plans.

Innovation in Product Offerings

Launched a 150 terabyte DirectFlash module and expanded the E family, addressing the increase in unstructured data driven by AI.

Lowlights

Impact of NAND Price Increase

Rising NAND prices negatively affected gross margins, particularly for the E family, which competes against disk-based solutions.

Challenges in Evergreen//One Sales

FY '25 TCV sales for Evergreen//One and other service offerings saw a 3% decline due to extended timelines needed to close large deals and higher conversion to traditional sales.

International Revenue Decline

International revenue decreased by 3% year-over-year in Q4, contrasting with U.S. growth.

Supply Chain and Geopolitical Risks

Geopolitical uncertainty and potential tariffs pose risks to the supply chain and overall business environment.

Company Guidance

During the Pure Storage Fourth Quarter and Full Year Fiscal 2025 Financial Results Conference Call, the company exceeded its revenue and earnings guidance, achieving a total revenue of $3.2 billion, marking a 12% increase from the previous year. The company also reported a record operating profit of $559 million, with a Q4 operating profit of $153 million and an operating margin of 17.4%. Pure Storage's subscription services revenue grew by 17% to $385 million, with annual recurring revenue reaching $1.7 billion, a 21% increase. The total remaining performance obligations (RPO) grew by 14% to $2.6 billion, with subscription services-related RPO increasing by 15%. The company acquired 334 new customers, maintaining service to 62% of the Fortune 500. Looking ahead, Pure Storage expects an 11% revenue growth for FY 2026, with a revenue target of over $3.5 billion and an operating profit of approximately $595 million, maintaining a 17% operating margin. The company plans to continue investments in expanding their DirectFlash modules and scaling operations for large production deployments, particularly in light of their recent hyperscale design win.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.