Technology infrastructure is a vast category encompassing hardware and software components that support and optimize the delivery and utilization of information technology (IT) services. Companies in this category can provide hardware, including servers, storage, and networking equipment to software applications, databases, operating systems, middleware and support. Despite the uncertain economic climate, artificial intelligence (AI) is driving a resurgence in IT spending. Here are two technology infrastructure companies thriving thanks to AI, storage and the cloud.
Nutanix is a cloud computing and software provider that offers hybrid cloud and hyper-converged infrastructure (HCI) solutions that can unify private, public and distributed clouds that power IT applications. HCI enables consolidating multiple data center components, including storage, computing and networking, into a single system to simplify IT infrastructure, trim costs, and improve agility.
AI Utilization
Nutanix Cloud Platform's distributed architecture enables it to be resilient and scalable. It utilizes AI to monitor and analyze system performance, detect and prevent security threats and simplify IT management tasks through its Prism Central, Flow and Era services. The company also launched its Nutanix GPT-in-a-Box solution for its customers. It allows companies to size, configure and purchase AI-ready infrastructure to run generative pre-trained transformers (GPT).\
Hyper Growth Continues
Nutanix reported fiscal Q4 2023 earnings of 24 cents per share, beating estimates by eight cents. Revenues surged 28.2% YoY to $494.21 billion, beating $475.23 million analyst estimates. The company authorized a $350 million stock buyback plan. The company forged a global strategic partnership to accelerate hybrid multi-cloud deployments. Hybrid cloud implements on-premises infrastructure with public cloud services.
Raising the Bar
The company raised its fiscal Q1 2024 revenue guidance of $495 million to $505 million versus $487.26 million consensus analyst estimates. Fiscal full-year 2024 revenue guidance was raised between $2.085 billion to $2.115 billion versus $2.07 billion.
CEO Insights
Nutanix CEO Rajiv Ramaswami commented, "Our consistent execution over the course of the year against an uncertain macro backdrop is a testament to the benefits of our subscription model, as well as the value our customers see in the Nutanix Cloud Platform as they look to modernize their IT footprints and implement hybrid multi-cloud operating models."
Analyst Actions
On September 21, 2023, Bank of America upgraded Nutanix to a Buy from a Neutral rating and raised its price target to $50 from $39. Upside levers include the rollout of GPT-in-a-Box and the Cisco partnership. Cisco is expected to sell Nutanix's hybrid multi-cloud software. Fundamentals should improve over the next few years, driving higher annual contract value (ACV) billings, revenue and operating margins. They also expect renewals to steer a high portion of ACV billings growth.
Nutanix analyst ratings and price targets are at MarketBeat. Nutanix peers and competitor stocks can be found with the MarketBeat stock screener.
Dueling Market Structures Potential Seed Wave
The daily candlestick chart on NTNX shows a dueling market structure formation comprised of a market structure high (MSH) sell trigger at $38.23 versus a market structure low (MSL) buy trigger at $35.09. If the recent six-candle sell-off forms a higher MSL trigger with a higher low, it can form a powerful seed wave breakout. A seed wave would target three potential reversal zone price targets at the 1.27 fib at $41.34, the 1.414 fibs at $42.25 and the 1.68 fix extension at $43.54. Meanwhile, the daily relative strength index (RSI) continues to slip through the 50-band. Pullback support levels are at $35.09, $34.10, $33.10 and $31.99.
Leading all-flash, enterprise data storage solution provider Pure Storage Inc. continues to consistently grow, beat and raise estimates despite the uncertain macroeconomic climate. The company offers all flash-storage arrays that enable enterprises to improve their IT infrastructure's performance, efficiency and scalability. Its FlashArray is a line of all-flash storage arrays, a software-defined storage platform using flash memory rather than legacy hard drives. FlashArray delivers high performance and scalability for enterprise-grade workloads that include databases, virtual machines and cloud applications.
FlashBlade for Enterprise
FlashBlade is a unified fast file and object storage platform powered by Pure Storage's DirectFlash technology. A single FlashBlade//S U chassis contains 1.9 petabytes of storage. FlashBlade is designed to deliver 99.99% availability. It enables a whole rack to operate as a giant single SSD. It's used by data centers, Fortune 500 companies, and government agencies. It's used to manage data lakes, which are massive data repositories. Its pure flash storage consumes 80% less power than data centers.
FlashBlade for AI
FlashBlade is used to train and run machine learning modules. FlashBlade is widely used to store media and entertainment content. FlashBlade high performance and scalability make it ideal for AI and deep learning applications that require massive amounts of data. Its FlashBlade AIRI//S is designed for AI deployment. It's often paired with AI partner Nvidia Co. NASDAQ: NVDA GPUs to create a complete AI platform. Some of the largest technology companies deploy FlashBlade for AI applications, including Alphabet Inc. NASDAQ: GOOGL, Meta Platforms Inc. NASDAQ: META, Microsoft Co. NASDAQ: MSFT and Amazon.com Inc. NASDAQ: AMZN.
Beat and Raise Again
Pure Storage reported fiscal Q2 2024 EPS of 32 cents, beating consensus analyst estimates by 4 cents. Revenues rose 6.5% YoY to $688.67 million, beating $681.95 million consensus analyst estimates. Customers grew to over 12,000. Non-GAAP operating income rose to $112 million. Subscription annual run rate (ARR) rose 27% YoY to $1.22 billion. Pure Storage raised its fiscal Q3 2024 revenues of $760 million versus $756.88 million analyst estimates. Full-year fiscal 2024 growth is expected in the mid to high single-digit percentage range.
Analyst Actions
On August 31, 2023, TD Cowen reiterated shares of Pure Storage to Outperform and raised its price target to $50 from $44. Cowen analyst Krish Sankar commented, "PSTG reaffirmed its rev growth for C23, an outlook that considers pricing competition macro. The 8-digit GenAI deal should not be overlooked and highlights the company's product portfolio. Operating leverage remains a key focus in C24. PT to $50."
Pure Storage analyst ratings and price targets are at MarketBeat.
Weekly Descending Triangle
The weekly candlestick chart on PSTG illustrates a weekly descending triangle pattern. The descending trendline commenced after peaking at $40.50 in September 2023. The flat-bottom horizontal trendline formed at $33.33. The weekly MSL triggers above $35.20. PSTG is testing a potential breakdown as it falls under the flat-bottom trendline powered by a falling weekly RSI through the 40-band. Pullback support levels are at $32.18, $31.52, $30.28 and $29.66.
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