Examining Pure Storage Shares After 31% Rally and AI Partnership News in 2025

• Wondering whether Pure Storage is trading at a bargain or riding high on hype? You are not alone. The search for real value is always worth your time.
• Pure Storage’s stock is up a staggering 64.6% over the past year and 31.1% year-to-date. However, it has pulled back a bit in recent weeks, with a 9.9% drop over the last 30 days.
• News around accelerated adoption of flash storage in enterprise IT and continued partnerships with major cloud providers has fueled market enthusiasm recently. At the same time, analysts have taken note as Pure Storage announced expanded collaboration with NVIDIA on AI-related storage solutions, further energizing investor sentiment.
• Pure Storage currently scores a 2 out of 6 on our valuation checks. This suggests that while there are undervalued aspects, the whole picture is more nuanced. We will dig into the ways analysts measure value next, and at the end, we will reveal an even more actionable way for you to think about valuation moving forward.

Pure Storage scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Pure Storage Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by projecting its future cash flows and then discounting those amounts back to today’s dollars. This approach tries to answer what Pure Storage is truly worth by focusing on how much money it can generate in the future.

Currently, Pure Storage produces Free Cash Flow of about $560.9 Million. Analyst forecasts suggest steady growth, with Free Cash Flow projected to reach approximately $1.55 Billion by 2030. While analyst projections are only available for the next five years, longer-term numbers are algorithmically extrapolated to indicate a continued uptrend in cash generation.

After discounting all future cash flows according to the model, Pure Storage's estimated intrinsic value is $101.48 per share. With the current share price trading roughly 19.2% below this fair value estimate, the DCF indicates the stock may be undervalued by a meaningful margin. This suggests the market might be underappreciating Pure Storage’s ability to generate growing cash flows over the next decade.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Pure Storage is undervalued by 19.2%. Track this in your watchlist or portfolio, or discover 898 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Pure Storage.

Approach 2: Pure Storage Price vs Sales

The Price-to-Sales (P/S) multiple is often the go-to valuation metric for technology companies like Pure Storage, especially when profits may be variable but revenue growth remains a key driver. Since Pure Storage is solidly growing sales, P/S gives investors a clear sense of how much they're paying for each dollar of revenue, regardless of near-term fluctuations in earnings.

Growth expectations and overall business risk play a big role in shaping what counts as a “normal” P/S ratio. High-growth, low-risk companies tend to see higher P/S multiples, while more mature or riskier businesses usually trade at lower ratios. For context, Pure Storage is currently trading at a P/S of 8.04x, which is well above both its industry average of 1.94x and the peer average of 2.26x. On the surface, that may suggest the stock is expensive compared to its sector.

This is where Simply Wall St's proprietary “Fair Ratio” comes in. The Fair Ratio, calculated as 13.35x for Pure Storage, is tailored to the company’s specific growth outlook, profit margins, risks, size and industry conditions. It provides a more nuanced benchmark than blunt peer or industry averages. Because it takes into account both upside potential and any company-specific challenges, it gives investors a more accurate reference point.

Comparing the current P/S of 8.04x with the Fair Ratio of 13.35x suggests that Pure Storage is trading at a considerable discount to what would be justified by its fundamentals and growth prospects.

Result: UNDERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1416 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Pure Storage Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is simply the story you believe about a company, connecting your view of its business prospects with numbers such as future revenue, profits and margins, and then using these personal forecasts to arrive at a fair value.

Narratives allow you to move past static valuation models by blending your research and perspective with tailored financial assumptions. This approach links the company’s story, for example new product launches, market expansion, or shifting competitive risks, to an explicit financial forecast and resulting fair value.

On Simply Wall St’s Community page, millions of investors use Narratives as an accessible tool to capture their investment thesis, see how their fair value compares to current share price, and decide whether the stock looks attractive for them to buy or sell right now. Because Narratives automatically update as new news or earnings arrive, your analysis always reflects the latest information with no spreadsheet updates needed.

For Pure Storage, some investors may be bullish and forecast continued rapid adoption in AI storage, projecting a fair value as high as $93. Others, wary of hyperscaler risks and competitive headwinds, might set a much lower fair value near $55. Narratives reveal these differences so you can clearly see where you stand.

Do you think there's more to the story for Pure Storage? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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