Last Update 03 Feb 26

Fair value Decreased 2.72%

NTNX: Future VMware Displacements And AI Workloads Will Support Long-Term Repricing

The analyst price target for Nutanix has been trimmed by about US$2 to reflect lower modeled revenue growth, a reduced future P/E multiple, and recent target cuts and rating changes from several firms, even as analysts still see an attractive long term business profile.

Analyst Commentary

Recent Street research on Nutanix reflects a mix of optimism about the long term opportunity and caution around execution and growth visibility in the nearer term. Price targets have generally been reset lower, and in some cases ratings have been downgraded, as firms update their models after recent results and guidance.

Bullish Takeaways

Bullish analysts highlight Nutanix's revenue scale of more than US$2.5b as a sign that the business has reached a meaningful size, which they see as supportive of the long term thesis even as they fine tune growth assumptions.
Some firms continue to assign Buy or Overweight ratings with targets in the US$64 to US$90 range, indicating they still see upside potential relative to their assessment of Nutanix's business profile and execution prospects.
Oppenheimer points to industry demand for HyperConverged Infrastructure and potential VMware displacement over time as key drivers that could support Nutanix's growth and positioning in virtualization and AI inferencing.
One firm notes that a greater mix of orders with future start dates weighed on in quarter revenue but did not affect free cash flow, and argues that if this timing effect had aligned with prior assumptions, Nutanix would have landed above the high end of revenue guidance.

Bearish Takeaways

Bearish analysts have moved ratings down to more neutral stances, citing reduced visibility into top line growth heading into calendar year 2026 and updating models to reflect this lower clarity.
Several firms cut price targets, in some cases from the US$80s into the US$60s and low US$70s, as they incorporate recent guidance revisions, the first miss versus expectations in more than 5 years, and a 3% trim to the FY26 outlook.
Checks referenced by one research provider led to a downgrade to a Mixed view, indicating concerns about execution risk and how well current expectations line up with what they are hearing from the field.
JPMorgan flags broader investor concerns around the sustainability of artificial intelligence demand for off cycle hardware reporters. While it still expects near term revenue and earnings upsides for AI leveraged companies, it has modestly reduced its Nutanix target to reflect a more tempered assessment.

What's in the News

Nutanix reported that from August 1, 2025 to October 31, 2025 it repurchased 704,000 shares for US$50.03m, bringing total buybacks under the August 31, 2023 program to 4,861,000 shares for US$288.6m, equal to 1.91% of shares (Key Developments).
The company issued earnings guidance for the second quarter of fiscal 2026 with expected revenue in the range of US$705m to US$715m, and for fiscal 2026 with expected revenue in the range of US$2.82b to US$2.86b (Key Developments).
At Microsoft Ignite 2025, Nutanix announced that Nutanix Cloud Platform will support Microsoft Azure Virtual Desktop for hybrid environments, allowing customers to run Azure Virtual Desktop on premises on Nutanix AHV while using Azure management tools for connectivity and control (Key Developments).
The Azure Virtual Desktop on Nutanix AHV offering is aimed at organizations with strict data residency and sovereignty needs, such as financial services, healthcare and government, and is described as under development (Key Developments).

Valuation Changes

Fair Value Estimate, trimmed slightly from US$67.85 to US$66.00 per share.
Discount Rate, nudged higher from 8.77% to 8.78%, implying a marginally higher implied risk level in the model.
Revenue Growth, reduced modestly from 13.00% to 12.65%, reflecting slightly lower modeled top line expansion.
Net Profit Margin, raised from 15.84% to 17.38%, indicating higher expected profitability in the updated assumptions.
Future P/E, brought down from 41.01x to 36.72x, pointing to a lower valuation multiple applied to projected earnings.

Strategic partnerships, AI-driven innovation, and platform differentiation position Nutanix for expanded market share as enterprise cloud adoption accelerates.
Recurring revenue growth, longer contracts, and leading margins enhance Nutanix's financial predictability and long-term profitability.
Intensifying competition from public cloud and IT vendors, rising costs, and customer concentration threaten Nutanix's revenue growth, profitability, and long-term differentiation.

Catalysts

About Nutanix

Provides an enterprise cloud platform in North America, Europe, the Asia Pacific, the Middle East, Latin America, and Africa.What are the underlying business or industry changes driving this perspective?

Accelerating adoption of hybrid and multi-cloud architectures, highlighted by new integrations with Google Cloud and deepening partnerships with AWS, Azure, Dell, and Pure Storage, positions Nutanix to capture a broader share of enterprise infrastructure modernization budgets, expanding its addressable market and driving sustained revenue growth.
Ongoing enterprise digital transformation and demand for scalable solutions, as evidenced by large multi-year deals, major wins like Finanz Informatik, and increasing contributions from Global 2000 customers, provide a robust pipeline for future "land and expand" motions, improving both revenue visibility and opportunities for net new ARR expansion.
Innovation in AI-driven and software-defined offerings-including enhanced AI capabilities (GPT-in-a-Box 2.0, Nutanix Enterprise AI), support for external storage, and integrated container management-differentiates the platform in an increasingly data
and automation-focused environment, paving the way for higher gross margins and long-term margin expansion.
The ongoing shift to a subscription-based recurring revenue model, rising average contract duration, strong net retention (NRR), and industry-leading gross margins all contribute to improved predictability of earnings and financial stability, increasing long-term profitability.
Continued industry migration from legacy infrastructure toward hyperconverged and software-defined solutions-combined with Nutanix's recognition as a leader in hybrid and multi-cloud and container management by Gartner and Forrester-reinforces Nutanix's strategic positioning and suggests significant room for future revenue growth and market share gains as secular adoption accelerates.

Nutanix Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Nutanix's revenue will grow by 15.3% annually over the next 3 years.
Analysts assume that profit margins will increase from 7.4% today to 13.2% in 3 years time.
Analysts expect earnings to reach $513.0 million (and earnings per share of $1.73) by about September 2028, up from $188.4 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 60.5x on those 2028 earnings, down from 96.6x today. This future PE is greater than the current PE for the US Software industry at 36.6x.
Analysts expect the number of shares outstanding to grow by 1.3% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.65%, as per the Simply Wall St company report.

Nutanix Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Ongoing shift of enterprise IT workloads to hyperscale public cloud vendors (e.g., AWS, Azure, Google Cloud) may slow demand for Nutanix's hyper-converged infrastructure, reducing long-term revenue growth potential as public cloud outpaces private/hybrid deployments.
Persistent customer concentration in solutions like Dell PowerFlex and other large enterprise deals exposes Nutanix to revenue instability; significant losses, delayed renewals, or renegotiations with these large clients could materially impact top-line growth and earnings predictability.
Slowing growth in net retention rate (NRR) and expanding average initial deal size signals that future expansion within existing customers may become more challenging, undermining ARR growth and future net margin scalability.
Elevated and rising operating expenses-including delayed headcount additions, increased SG&A, and continuing R&D investments to maintain product leadership-may compress margins and limit improvements in profitability over the next several years.
Industry-wide pricing pressure driven by intensifying competition from established IT vendors, public cloud providers, and the risk of commoditization in hyper-converged infrastructure software could erode Nutanix's differentiation, reduce average selling prices, and put long-term pressure on both revenue and earnings.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $87.025 for Nutanix based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $95.0, and the most bearish reporting a price target of just $71.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $3.9 billion, earnings will come to $513.0 million, and it would be trading on a PE ratio of 60.5x, assuming you use a discount rate of 8.6%.
Given the current share price of $67.9, the analyst price target of $87.03 is 22.0% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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