NTNX: Market Share Gains Will Drive Longer-Term Outperformance Despite Recent Guidance Reset

Analysts have trimmed their average price target on Nutanix by roughly $15, to the low $70s. This reflects slightly slower expected revenue growth and a higher discount rate, partially offset by improved margin and valuation assumptions following the company’s first earnings miss in more than five years and subsequent model resets across the Street.

Analyst Commentary

Street research following the quarter highlights a more nuanced stance on Nutanix, with both supportive and cautious views emerging as investors recalibrate expectations for growth, execution, and valuation.

Bullish Takeaways

Bullish analysts argue that the recent revenue miss is largely a timing issue tied to a greater mix of future start date deals, which depresses in quarter revenue but preserves free cash flow and underlying demand.
Several expect Nutanix to remain a key beneficiary of the industry shift toward hyperconverged infrastructure and see a long runway to displace incumbents facing customer pushback on pricing.
There is growing conviction that Nutanix can leverage its platform to capture unstructured data workloads and emerging AI inferencing use cases, supporting a higher long term growth profile than near term guidance implies.
JPMorgan and other bullish analysts still forecast upside from AI related projects over time, suggesting recent multiple compression may overstate the risk to medium term revenue and earnings growth.

Bearish Takeaways

Bearish analysts emphasize that the first miss in more than five years, coupled with a lower multi year outlook, raises questions about execution consistency and the durability of Nutanix's growth algorithm.
Some see the increased prevalence of deals with delayed start dates as a sign of elongated sales cycles and more cautious customer spending, which could constrain near term growth and justify lower valuation multiples.
Downgraded views highlight recent checks that point to softer demand in certain end markets and a slower than expected ramp in standalone virtualization, tempering expectations for rapid share gains.
There is concern that the pullback in AI related valuation premiums across hardware and infrastructure names may limit multiple expansion for Nutanix until the company delivers several quarters of clean execution and reaccelerating growth.

What's in the News

Issued Fiscal 2Q 2026 revenue guidance of $705 million to $715 million and full year Fiscal 2026 revenue outlook of $2.82 billion to $2.86 billion, signaling continued top line growth expectations (Corporate guidance)
Announced support for Microsoft Azure Virtual Desktop on Nutanix AHV for hybrid environments, enabling customers to run Azure Virtual Desktop on premises while using Azure management and brokering in the cloud (Microsoft Ignite 2025 client announcement)
DartPoints joined the Nutanix Elevate Service Provider Program to deliver fully managed, compliance focused private cloud solutions built on Nutanix hyperconverged infrastructure for regulated industries (Client announcement)
Leostream renewed its alliance with Nutanix and achieved Nutanix Ready AHV validation, expanding jointly validated VDI and desktops as a service solutions for demanding, large scale deployments (Client announcement)
Nutanix shares were added to the S&P 400, S&P 400 Application Software, S&P 400 Information Technology, and S&P Composite 1500 indices, increasing the company’s visibility with index and passive investors (Index constituent additions)

Valuation Changes

The fair value estimate has fallen significantly, from approximately $85.78 to $70.70, reflecting lower modeled revenue growth and a slightly higher discount rate.
The discount rate has risen slightly, from about 8.66 percent to 8.79 percent, modestly increasing the hurdle rate applied to future cash flows.
Revenue growth has been trimmed meaningfully, from an expected 14.83 percent to 13.00 percent, indicating more conservative top line assumptions.
Net profit margin has improved modestly, from roughly 14.75 percent to 15.84 percent, incorporating higher long term profitability expectations.
The future P/E multiple has been reduced notably, from around 52.6x to 41.8x, aligning the valuation more closely with the updated growth and risk profile.

Strategic partnerships, AI-driven innovation, and platform differentiation position Nutanix for expanded market share as enterprise cloud adoption accelerates.
Recurring revenue growth, longer contracts, and leading margins enhance Nutanix's financial predictability and long-term profitability.
Intensifying competition from public cloud and IT vendors, rising costs, and customer concentration threaten Nutanix's revenue growth, profitability, and long-term differentiation.

Catalysts

About Nutanix

Provides an enterprise cloud platform in North America, Europe, the Asia Pacific, the Middle East, Latin America, and Africa.What are the underlying business or industry changes driving this perspective?

Accelerating adoption of hybrid and multi-cloud architectures, highlighted by new integrations with Google Cloud and deepening partnerships with AWS, Azure, Dell, and Pure Storage, positions Nutanix to capture a broader share of enterprise infrastructure modernization budgets, expanding its addressable market and driving sustained revenue growth.
Ongoing enterprise digital transformation and demand for scalable solutions, as evidenced by large multi-year deals, major wins like Finanz Informatik, and increasing contributions from Global 2000 customers, provide a robust pipeline for future "land and expand" motions, improving both revenue visibility and opportunities for net new ARR expansion.
Innovation in AI-driven and software-defined offerings-including enhanced AI capabilities (GPT-in-a-Box 2.0, Nutanix Enterprise AI), support for external storage, and integrated container management-differentiates the platform in an increasingly data
and automation-focused environment, paving the way for higher gross margins and long-term margin expansion.
The ongoing shift to a subscription-based recurring revenue model, rising average contract duration, strong net retention (NRR), and industry-leading gross margins all contribute to improved predictability of earnings and financial stability, increasing long-term profitability.
Continued industry migration from legacy infrastructure toward hyperconverged and software-defined solutions-combined with Nutanix's recognition as a leader in hybrid and multi-cloud and container management by Gartner and Forrester-reinforces Nutanix's strategic positioning and suggests significant room for future revenue growth and market share gains as secular adoption accelerates.

Nutanix Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Nutanix's revenue will grow by 15.3% annually over the next 3 years.
Analysts assume that profit margins will increase from 7.4% today to 13.2% in 3 years time.
Analysts expect earnings to reach $513.0 million (and earnings per share of $1.73) by about September 2028, up from $188.4 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 60.5x on those 2028 earnings, down from 96.6x today. This future PE is greater than the current PE for the US Software industry at 36.6x.
Analysts expect the number of shares outstanding to grow by 1.3% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.65%, as per the Simply Wall St company report.

Nutanix Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Ongoing shift of enterprise IT workloads to hyperscale public cloud vendors (e.g., AWS, Azure, Google Cloud) may slow demand for Nutanix's hyper-converged infrastructure, reducing long-term revenue growth potential as public cloud outpaces private/hybrid deployments.
Persistent customer concentration in solutions like Dell PowerFlex and other large enterprise deals exposes Nutanix to revenue instability; significant losses, delayed renewals, or renegotiations with these large clients could materially impact top-line growth and earnings predictability.
Slowing growth in net retention rate (NRR) and expanding average initial deal size signals that future expansion within existing customers may become more challenging, undermining ARR growth and future net margin scalability.
Elevated and rising operating expenses-including delayed headcount additions, increased SG&A, and continuing R&D investments to maintain product leadership-may compress margins and limit improvements in profitability over the next several years.
Industry-wide pricing pressure driven by intensifying competition from established IT vendors, public cloud providers, and the risk of commoditization in hyper-converged infrastructure software could erode Nutanix's differentiation, reduce average selling prices, and put long-term pressure on both revenue and earnings.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $87.025 for Nutanix based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $95.0, and the most bearish reporting a price target of just $71.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $3.9 billion, earnings will come to $513.0 million, and it would be trading on a PE ratio of 60.5x, assuming you use a discount rate of 8.6%.
Given the current share price of $67.9, the analyst price target of $87.03 is 22.0% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Google Cloud And Multi-Cloud Integrations Will Redefine Enterprise IT