Pure Storage (PSTG): Evaluating Valuation After Strategic AI Partnership With Cisco and NVIDIA

Pure Storage (PSTG) is making headlines after announcing a new partnership with Cisco and NVIDIA. This partnership is designed to help enterprises move AI projects from early trials into full-scale use. The collaboration addresses some of the most pressing roadblocks for businesses embracing AI.

See our latest analysis for Pure Storage.

Pure Storage’s announcement comes at a time when the company’s stock has shown remarkable momentum, with a recent 90-day share price return of 81% and a total shareholder return of 93% over the past year. This surge suggests that investors are growing increasingly confident in Pure Storage’s role at the center of the enterprise AI boom and the company’s ability to turn innovative partnerships into sustained growth.

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But after such a rapid rise, does Pure Storage still have further upside? Or are investors already pricing in all the potential from these AI partnerships? Is there a real buying opportunity here, or is the future growth already reflected in the stock price?

Most Popular Narrative: 10.4% Overvalued

Pure Storage's current share price sits well above the most popular narrative fair value estimate. This gap has analysts debating whether optimism is outpacing fundamentals as excitement about long-term growth builds.

The adoption of Pure's Enterprise Data Cloud architecture and software-defined solutions is accelerating among large enterprises, driven by the need to manage rapidly growing and increasingly valuable data assets in the evolving AI economy. This positions Pure to capture rising long-term revenue from digital transformation and AI/ML-driven workloads.

Read the complete narrative.

Want to see what’s fueling this ambitious price? Powerful forecasts for earnings, revenue, and profit margins set the stage for one of the boldest tech narratives around. What hidden assumptions unlock that higher valuation? Find out what makes the market so convinced Pure Storage is at the center of the next wave of growth.

Result: Fair Value of $89.39 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, shifting enterprise demand or slower hyperscaler adoption could present challenges for Pure Storage’s growth story and affect future earnings predictability.

Find out about the key risks to this Pure Storage narrative.

Another View: DCF Model Points to Hidden Value

While the stock looks overvalued compared to analyst price targets, our SWS DCF model presents a more optimistic picture. According to this long-term cash flow forecast, Pure Storage is actually trading slightly below its estimated fair value, which suggests there may be potential upside that is not yet fully recognized by the market. Does this indicate the stock is undervalued, or could the cash flow assumptions be too ambitious?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Pure Storage for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 832 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Pure Storage Narrative

If you want to dive deeper or think a different storyline fits the facts, you can easily craft your own narrative in just a few minutes. Do it your way.

A great starting point for your Pure Storage research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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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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