Pure Storage (PSTG): Valuation in Focus Following Cloud Platform Launch and Expanded Azure Integration

Purer Storage (PSTG) has found itself in the spotlight after unveiling a wave of new platform features, including its Pure Storage Cloud product and expanded Azure integrations. These advancements are attracting fresh investor interest as organizations increasingly focus on AI-driven data management strategies.

See our latest analysis for Pure Storage.

Pure Storage’s momentum is hard to ignore, with the stock riding a wave of enthusiasm for next-gen data infrastructure and AI integration. Even after a brief pullback, the 1-year total shareholder return stands at nearly 68%, and the five-year figure is an impressive 389%. While some volatility persists with the broader tech sector, investors are clearly betting on continued demand for reliable, scalable storage in an AI-powered future.

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Yet with shares up sharply over the past year, investors now face a critical question. Is Pure Storage still undervalued given its growth prospects, or has the market already priced in the next stage of its evolution?

Most Popular Narrative: 5.2% Overvalued

With Pure Storage's last close price of $89.37 now standing higher than the widely-followed narrative's fair value estimate of $84.94, the latest narrative sets a higher valuation bar driven by strong cloud adoption hopes and growth projections. This narrative pins its conclusion on expanding enterprise capabilities and a bold outlook for future profitability, but the current market price trades above consensus fair value.

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 know the blockbuster numbers behind this bold valuation call? The real story rests on projected revenue leaps, sustained margin expansion, and a future profit multiple that is sure to spark debate. Discover what assumptions are fueling such optimism—and why this narrative thinks Pure Storage is set up for an AI-powered windfall.

Result: Fair Value of $84.94 (OVERVALUED)

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

However, uncertainty still lingers. Pure Storage’s shift to recurring cloud revenues could stall if hyperscaler deals remain slow to ramp or if competition intensifies.

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

Another View: Discounted Cash Flow Puts a Twist on the Story

For a fresh perspective, our SWS DCF model suggests Pure Storage is actually undervalued, with a fair value estimate of $102.87 versus the current share price. This approach looks beyond market multiples and tries to capture long-term cash flow potential. So, which narrative best describes reality? Is it the market's caution, or this optimistic DCF scenario?

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 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 see things differently or feel like digging into the numbers yourself, you can craft a complete investment story 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 1 important warning sign 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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