Last Update 05 Mar 26

Fair value Decreased 6.66%

NTNX: AMD AI Partnership Will Drive Future VMware Migration Upside

Nutanix's analyst price target has been revised lower by about $4 to reflect a slightly higher discount rate and more modest profit margin assumptions, even as analysts point to resilient bookings, strong customer additions, and support from OEM and AMD partnerships.

Analyst Commentary

Recent research takes a mixed view on Nutanix, with most firms trimming price targets but still highlighting a solid operating backdrop and active customer pipeline. For you as an investor, the key tension is between resilient demand indicators and reduced visibility on near term revenue and cash generation.

Bullish Takeaways

Bullish analysts point to solid quarterly execution, with bookings expectations raised and total contract value bookings described as growing in the mid teens and outpacing revenue, which they see as supportive for longer term growth and valuation support.
Several firms highlight strong demand signals, including 16% year over year annual recurring revenue growth, 17% year over year cRPO growth, and the highest net new customer additions in eight years, which they view as evidence that the core platform is still gaining traction.
Partnerships with OEMs and large vendors, including AMD, Dell, Cisco and Red Hat, along with a US$250m investment and edge inference collaboration with AMD, are cited as important contributors to bookings and as potential supports for the companys position in hybrid cloud and AI related workloads.
Some bullish analysts reference the VMware migration opportunity, noting that current penetration is described as only 20%, which they see as leaving meaningful room for Nutanix to pursue additional share gains over time.

Bearish Takeaways

Bearish analysts focus on repeated price target cuts and reduced revenue and free cash flow guidance, which they connect to weaker visibility on the top line and a moderating growth trajectory heading into calendar 2026.
Server and broader supply chain constraints are flagged as a headwind, with timing related CPU and memory issues and OEM channel supply limits pushing some revenue recognition into later periods, adding uncertainty to near term execution.
Fiscal year sales guidance cuts and a weaker FY26 outlook, tied to delayed project starts, leave some firms more cautious around how quickly bookings momentum can translate into reported revenue and cash flow.
Multiple downgrades to Equal Weight ratings reflect concern that, despite a business scale of roughly US$2.5b plus in revenue, the risk reward trade off is less compelling when growth visibility is described as diminishing and valuation already reflects a fair amount of optimism.

What’s in the News

AMD and Nutanix entered a multi-year partnership to co-develop an open, full-stack AI infrastructure platform for agentic AI applications across data center, hybrid and edge environments, including optimization of Nutanix Cloud and Kubernetes platforms on AMD EPYC CPUs and Instinct GPUs and integration with the AMD ROCm software ecosystem and AMD Enterprise AI platform (Key Developments).
As part of this partnership, AMD plans a US$150m strategic investment in Nutanix common stock at US$36.26 per share and may fund up to US$100m to support joint engineering and go to market efforts, for potential aggregate proceeds of about US$250m, with closing targeted for the second quarter of 2026 subject to approvals and conditions (Key Developments).
Nutanix issued earnings guidance for fiscal 2026, with expected third quarter revenue of US$680m to US$690m and full year revenue of US$2.80b to US$2.84b (Key Developments).
Nutanix agreed to a stock purchase arrangement with AMD to issue 4,136,789 Class A shares at US$36.26 per share in a private placement, for gross proceeds of about US$150m and potential total proceeds of about US$250m including funding for joint projects, subject to regulatory approvals and customary closing conditions (Key Developments).
Ark Data Centers reached Champion Elevate Service Provider Partner status with Nutanix, signaling advanced certifications and capabilities across the Nutanix portfolio to support services such as disaster recovery, storage efficiency and operational simplification for mid market and enterprise clients (Key Developments).

Valuation Changes

Fair Value: revised lower from $63.07 to $58.87, a reduction of about 6.7%.
Discount Rate: nudged higher from 8.76% to 8.88%, a small increase that typically weighs on valuation estimates.
Revenue Growth: adjusted slightly higher from 12.79% to 12.83%.
Net Profit Margin: brought down from 15.32% to 14.13%, reflecting more cautious profitability assumptions.
Future P/E: trimmed from 39.61x to 36.25x, indicating a lower valuation multiple being used in forward estimates.

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Key Takeaways

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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