Last Update 20 Jan 26

Fair value Decreased 4.04%

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

Our updated analyst price target for Nutanix moves modestly lower to reflect a reduced fair value estimate of about $67.85, as analysts factor in recent price target cuts, a slight increase in the discount rate, and a lower assumed future P/E multiple following softer guidance and reduced visibility into top line growth.

Analyst Commentary

Recent Street research on Nutanix reflects a split view, with some analysts focusing on execution risks and reduced visibility, while others still see an appealing long term growth story tied to infrastructure trends and AI related workloads.

Bullish Takeaways

Bullish analysts highlight Nutanix reaching a scale of about US$2.5b in revenue as evidence that it is operating at a size where the business model and product set are established, which they see as supportive of long term value creation.
Some research points to Nutanix as a beneficiary of the shift toward HyperConverged Infrastructure and potential displacement of VMware at renewals. If this occurs, it could support future growth in workloads and customer wins.
AI related demand is a recurring theme, with optimistic analysts citing Nutanix exposure to unstructured data and AI applications. JPMorgan also references expectations for near term revenue and earnings upsides at AI leveraged companies as a potential support for sentiment.
Several firms that trimmed price targets kept positive or overweight style ratings in place. This suggests they still see upside potential over their new targets even after incorporating softer guidance and more conservative assumptions.

Bearish Takeaways

Bearish analysts point to diminished visibility into top line growth heading into calendar 2026. This has led to rating downgrades and a shift toward more neutral stances on the shares.
Multiple firms reduced their Nutanix price targets, in some cases by more than US$15 per share, as they recalibrated models for the guidance cut, a lower assumed future P/E multiple, and updated growth trajectories.
The first miss in more than 5 years, followed by about a 15% after hours share price move, has raised questions around execution consistency and contributed to a 3% cut to the FY26 guide in at least one model.
One research outlet shifted its view to Mixed from Positive, citing checks that appear less supportive. This adds to a broader pattern of more cautious commentary around near term performance and demand timing.

What's in the News

Nutanix completed a share repurchase program announced on August 31, 2023, buying back a total of 4,861,000 shares (1.91%) for US$288.6 million, including 704,000 shares repurchased between August 1, 2025 and October 31, 2025 for US$50.03 million (company filing).
The company issued revenue guidance for the second quarter of fiscal 2026 of US$705 million to US$715 million and full fiscal 2026 revenue guidance of US$2.82b to US$2.86b (company guidance).
At Microsoft Ignite 2025, Nutanix announced that Nutanix Cloud Platform will support Microsoft Azure Virtual Desktop for hybrid environments, allowing Azure Virtual Desktop to run on premises on Nutanix AHV with Azure-based brokering and management (company announcement).
DartPoints joined the Nutanix Elevate Service Provider Program and is offering fully managed, single tenant private cloud solutions built on Nutanix hyperconverged infrastructure, targeting compliance heavy sectors such as healthcare, financial services, and government (company announcement).
Leostream renewed its alliance with Nutanix, with the Leostream Platform awarded Nutanix Ready AHV validation on Nutanix AHV 10.3, supporting large scale virtual desktop infrastructure deployments on Nutanix infrastructure (company announcement).

Valuation Changes

Fair Value: moved modestly lower from about US$70.70 to about US$67.85.
Discount Rate: edged up slightly from about 8.73% to about 8.77%.
Revenue Growth: held effectively unchanged at about 13.00%.
Net Profit Margin: remained effectively unchanged at about 15.84%.
Future P/E: reduced slightly from about 42.7x to about 41.0x.

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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