NetApp CEO: ‘Building On A Position Of Strength’ With AI

‘While we continue to observe some macro-related spending caution, the emerging enterprise AI market is driving urgency among customers to modernize data infrastructure, advance cloud transformations, and bolster cyber resiliency. The data infrastructure demands of AI applications are complex and relentless, involving the need to unify, search, and organize massive volumes of data scattered across multiple silos, on premises, and in the cloud,’ says NetApp CEO George Kurian.

A focus on AI has become the major driver of NetApp’s all-flash storage business, leading the company to claim the title as the largest flash storage vendor in terms of revenue.

George Kurian, CEO of San Jose, Calif.-based NetApp, Wednesday told an audience of financial analysts during his company’s first fiscal quarter 2026 quarterly financial conference call that the company’s AI-focused growth overcame macroeconomic issues, leading to total revenue that exceeded the company’s prior expectations.

“While we continue to observe some macro-related spending caution, the emerging enterprise AI market is driving urgency among customers to modernize data infrastructure, advance cloud transformations, and bolster cyber resiliency,” Kurian said in his prepared remarks. “The data infrastructure demands of AI applications are complex and relentless, involving the need to unify, search, and organize massive volumes of data scattered across multiple silos, on premises, and in the cloud.”

It is a message that took investors a bit of time to digest. NetApp stock dropped about 8 percent after the company’s financials were released after the close of trade Wednesday, but by mid-morning Thursday shares had recovered and were up 2.5 percent over the earlier close at $114.96.

Legacy storage architectures are increasingly becoming bottlenecks, limiting enterprises’ ability to scale and adapt to new requirements, Kurian said.

“Organizations are turning to NetApp for data solutions that deliver competitive advantages and operational efficiencies,” he said. “Our unified data architecture, capable of handling any data type anywhere, empowers customers to break down silos, eliminate complexity, and accelerate their AI journeys.”

That showed in NetApp’s first fiscal quarter 2026 results, Kurian said.

NetApp’s all-flash array revenue grew 6 percent year-over-year to $893 million for an annualized run rate of $3.6 billion. By the end of the quarter, 45 percent of systems in NetApp’s installed base under active support contracts were all-flash arrays.

“Healthy customer engagement and strong interest in our unified and block-optimized all-flash storage portfolio have enabled us to displace competitive all-flash and hybrid-flash footprints,” he said. “This strength propelled us to the number one position in the all-flash array market for calendar Q1 2025, as reported by IDC.”

Focus on the cloud was a hallmark of NetApp’s business during the quarter, Kurian said. The company in the quarter enhanced each of its first-party cloud storage services, increasing their value to customers.

“Our natively integrated services enable customers to discover, deploy, and manage storage seamlessly alongside other native services,” he said. “This integration puts us in front of customers at the point of workload design, ties to hyperscaler committed spend, benefits from hyperscaler seller incentives, and reduces procurement and operational friction. In addition to a seamless customer experience, our cloud storage services deliver the performance, cost efficiency, data protection, cybersecurity, multiprotocol support, and hybrid multicloud capabilities of ONTAP. Our native integration and advantages over other cloud storage services are driving strong win rates in enterprise-critical workloads.”

AI deployments beyond training environments have become a priority for NetApp and its customers, Kurian said.

“Enterprises are beginning to explore and deploy inferencing workloads, shifting demand from proofs of concept to transformational initiatives which require comprehensive analysis of data sets across the enterprise,” he said. “Achieving business outcomes from AI investments is our customers’ and our priority.”

Successful enterprise AI deployments require unified data management, enterprise-grade data protection, production-scale reliability, hybrid-multicloud integration, and the ability to consolidate data without compromising privacy or security, Kurian said.

“Our AI solutions are designed to truly unify enterprise data, delivering outstanding performance and scale while also seamlessly meeting all these critical requirements,” he said. “This positions us exceptionally well to address the evolving needs of our customers.”

During the quarter, NetApp closed about 125 AI infrastructure and data lake modernization deals across multiple geographies, industries, and use cases, and further expanded its AI ecosystem, Kurian said.

“We introduced the AIPod Mini with Intel to address the cost and complexity of deploying AI at the department and team level,” he said. “Additionally, we completed the NetApp reference architecture for Nvidia Cloud Partners providing ultra-high performance with the richness of NetApp’s hyperscaler proven data management. This collaboration allows AI service providers to deliver scalable, high-performance, enterprise-grade data services by combining ONTAP’s advanced data management with Nvidia’s compute and networking platforms.”

Looking ahead, NetApp remains committed to executing its innovation roadmap, and is “building on a position of strength,” Kurian said.

“We have taken the No. 1 position in the all-flash market by helping customers modernize with cutting-edge data infrastructure and industry-leading cyber resilience for storage,” he said. “Our highly differentiated cloud services enable hybrid and multicloud transformations. And we are well-positioned and growing in the emerging area of enterprise AI.”

NetApp By The Numbers

For its first fiscal quarter 2026, which ended July 25, NetApp reported total revenue of $1.56 billion, up about 1 percent from the $1.54 billion the company reported for its first fiscal quarter 2025.

That beat analyst expectations by $20 million, according to Seeking Alpha.

Included in that total was product revenue of $654 million, down from last year’s $669 million; support revenue of $647 million, up from $631 million; and professional and other services revenue of $97 million, up from $82 million.

Looking at revenue from another angle, hybrid cloud segment revenue was $1.40 billion, up 1 percent over last year, and public cloud segment revenue of $161 million, up 1 percent.

About 76 percent of NetApp’s revenue came via indirect sales channels, down from last year’s 78 percent.

NetApp also reported GAAP net income of $233 million or $1.15 per share, down from last year’s $248 million or $1.17 per share. On a non-GAAP basis, NetApp reported net income of $314 million or $1.55 per share, down from last year’s $330 million or $1.56 per share.

Non-GAAP net income beat analyst expectations by 1 cent per share, according to Seeking Alpha.

Looking ahead, NetApp expects revenue for its second fiscal quarter 2026 to be in the range of $1.615 billion and $1.765 billion. That compares to last year’s second fiscal quarter revenue of $1.658 billion.

The company also expects GAAP earnings for the quarter of $1.35 per share to $1.45 per share, and non-GAAP earnings to be $1.84 per share to $1.94 per share. That compares to last year’s GAAP earnings of $1.42 per share and non-GAAP earnings of $1.87 per share.

For its full fiscal year 2026, NetApp expects revenue to be in the range of $6.625 billion and $6.875 billion. That compares to last year’s revenue of $6.572 billion.

The company also expects GAAP earnings for the year of $5.75 per share to $6.02 per share, and non-GAAP earnings to be $7.60 per share to $7.90 per share. That compares to last year’s GAAP earnings of $5.81 per share and non-GAAP earnings of $7.25 per share.