Pure Storage (PSTG): Gauging Valuation as Analyst Upgrades Highlight AI Growth Potential Ahead of Earnings

Pure Storage (PSTG) has been getting fresh attention after a wave of research firms updated their outlooks ahead of the company’s upcoming earnings report. Investors are focused on its growing role in AI and the demand for advanced data storage solutions.

See our latest analysis for Pure Storage.

The excitement around Pure Storage is building, even as the stock has faced some typical volatility lately. After a high-flying run, its share price slipped more than 7% over the last week and is down about 16% for the month. However, when looking at a broader timeframe, the momentum remains impressive, with a 32.7% gain over the past 90 days and a 51.7% total shareholder return for the past year. Anticipation around the company’s role in AI, recent upgrades from major analysts, and a strong track record of longer-term growth are keeping sentiment upbeat as the next earnings report approaches.

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With Pure Storage’s stock still trading below analyst price targets and recent upgrades highlighting strong future prospects, the key question is whether the current price leaves room for further upside or if expectations of growth are already fully reflected.

Most Popular Narrative: 15% Undervalued

With the latest fair value estimated at $92.21, Pure Storage's last close of $78.38 suggests analysts see a double-digit upside potential. The backdrop of stronger-than-expected revenue growth and expanding demand for AI-enabled storage shapes this bullish outlook.

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.

What’s fueling this upbeat valuation? Behind the headline numbers lie ambitious revenue forecasts, sharper profit margins, and big bets on the AI data boom. Want to see which specific growth drivers power this narrative's price target? Find out what could turn these bullish estimates into reality.

Result: Fair Value of $92.21 (UNDERVALUED)

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

However, persistent margin pressure and slower progress with hyperscaler partnerships could quickly curb recent optimism around Pure Storage’s ambitious growth outlook.

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

Another View: Price-to-Sales Multiple Signals Caution

While analysts see upside using future earnings estimates, Pure Storage’s price-to-sales ratio stands at 7.7x. This is much higher than the industry average of 1.7x and its peer group’s 2.1x. Although the company is valued below its fair ratio of 13.2x, the steep premium compared to rivals suggests high expectations are already reflected in the share price. Does this mean the margin for error is getting thin, or could a period of outperformance bring the market closer to that fair ratio?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Pure Storage Narrative

If you’re looking to dig deeper or think a different story is emerging from the numbers, crafting your own perspective is quick and easy. 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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