Last Update 19 Dec 25

NTNX: Future VMware Displacements Will Drive Long-Term Outperformance Despite Near-Term Guidance Reset

Nutanix's consensus analyst price target has been revised lower by roughly $10 to $15 per share, as analysts reduce valuation multiples and near term growth expectations following an in line quarter with softer guidance and the company's first miss in over five years.

Analyst Commentary

Street research following the quarter reflects a more cautious stance on Nutanix's near term execution, even as many on the sell side remain constructive on the long term growth and market share opportunity.

Bullish Takeaways

Bullish analysts continue to see Nutanix as a key beneficiary of the shift toward HyperConverged Infrastructure, which they believe can sustain double digit growth over time and support premium valuation multiples versus traditional hardware peers.
The opportunity to displace VMware at renewal cycles, amid customer pushback on price increases, is viewed as a multi year share gain driver that could offset cyclical softness in U.S. Federal or other slower segments.
Some research highlights Nutanix's positioning around unstructured data and AI workloads, arguing that AI inferencing use cases and broader data modernization efforts can provide incremental demand catalysts beyond the current guide.
Despite the recent guide reduction, certain firms point to solid free cash flow dynamics and the impact of future dated deals, suggesting that underlying demand trends may be healthier than headline revenue figures imply.

Bearish Takeaways

Bearish analysts emphasize that the first revenue miss in more than five years raises questions about forecasting precision and execution, leading to lower valuation multiples and reduced confidence in out year growth targets.
The increased mix of contracts with future start dates, while supportive of cash generation, is seen as complicating revenue visibility and adding volatility to quarterly results, which can weigh on near term sentiment and share performance.
Multiple firms have cut price targets by roughly $10 to $20 per share and trimmed longer term revenue estimates, reflecting caution around the sustainability of recent growth and the impact of macro and deal timing headwinds.
Some channel checks have driven rating downgrades to more neutral stances, with concerns that slowing U.S. Federal demand, elongated sales cycles and competition could limit upside to current guidance and constrain multiple expansion.

What's in the News

Nutanix updated its fiscal 2026 outlook, guiding second quarter revenue to $705 million to $715 million and full year revenue to $2.82 billion to $2.86 billion (corporate guidance).
The company reported progress on its share repurchase program, buying back 704,000 shares for $50.03 million between August 1 and October 31, 2025, and completing 4,861,000 shares repurchased for $288.6 million under its August 31, 2023 authorization (buyback tranche update).
At Microsoft Ignite 2025, Nutanix announced that Nutanix Cloud Platform will support Microsoft Azure Virtual Desktop for hybrid environments. This will enable customers to run Azure Virtual Desktop on premises on Nutanix AHV while using Azure management and brokering (client announcement).
DartPoints joined the Nutanix Elevate Service Provider Program to deliver fully managed, single tenant private cloud solutions on Nutanix HCI. The offering targets highly regulated industries and potential future expansion into GenAI focused infrastructure services (client announcement).
Nutanix was added to the S&P 1000 index, increasing its visibility and potential ownership among index tracking and benchmark aware investors (index constituent add).

Valuation Changes

Fair Value Estimate remains unchanged at approximately $70.70 per share, indicating no revision to the long term intrinsic value assessment.
The discount rate edged down slightly from about 8.79 percent to 8.74 percent, reflecting a modest reduction in the assumed risk profile or cost of capital.
Revenue growth is effectively unchanged, holding near 13.00 percent annualized in the long term model.
Net profit margin is stable at roughly 15.84 percent, signaling no material change to long term profitability assumptions.
The future P/E has risen slightly from around 41.8x to 42.7x, implying a modestly higher valuation multiple on forward earnings expectations.

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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