NetApp CEO: AI Is No Longer A Future Aspiration—It’s Driving Record Growth Now

‘Our broad-based success spanned industries and geographies, with multiyear agreements, expansion into new workloads and deeper customer engagement, all strong leading indicators of durable growth. While we are seeing some accelerated purchase decisions and pricing benefits, we are also seeing a clear, structural improvement in the underlying demand environment,’ says NetApp CEO George Kurian.

NetApp is starting off its fiscal year in a spectacular fashion thanks in large part to the impact of the growth of AI, according to CEO George Kurian.

Kurian late Wednesday told financial analysts on NetApp’s first fiscal quarter 2027 quarterly financial call that the San Jose, Calif.-based storage and AI technology developer’s revenue and profits hit record growth thanks to its disciplined business in a challenging component cost environment.

However, that growth stemmed from more than fiscal discipline, he said.

“This quarter’s achievements reflect more than just strong execution,” Kurian said. “They underscore NetApp’s growing leadership in a rapidly evolving environment. Our broad-based success spanned industries and geographies, with multiyear agreements, expansion into new workloads and deeper customer engagement, all strong leading indicators of durable growth. While we are seeing some accelerated purchase decisions and pricing benefits, we are also seeing a clear, structural improvement in the underlying demand environment, all of which contributed to Q1’s strong results and are fueling our momentum.”

AI was a major contributor to the company’s growth, Kurian said.

“AI is no longer a future aspiration,” he said. “It’s a business imperative. As organizations move to operationalize AI, the challenge is not just compute, but data readiness. NetApp is a key partner for companies making this shift, eliminating complexity and accelerating time-to-value at scale. The NetApp Platform enables customers to make all data AI-ready in place, providing unified storage, robust security, and a single control plane across hybrid multi-cloud environments [and] delivering capabilities that redefine expectations in the industry. By removing the need for data movement, we empower enterprises to accelerate AI and analytics while maintaining governance and control, enabling them to transition from AI experimentation to production with confidence.”

NetApp’s record first fiscal quarter was also fueled by robust growth in public cloud, all-flash and Keystone subscription revenue, which Kurian said reflects the momentum in its business and validating its strategy as it delivers meaningful results for customers.

Kurian illustrated that broad range of growth drivers by highlighting a number of deals the company completed during the quarter, including:

A major U.S. utility chose NetApp over legacy and flash-only competitors after a highly competitive evaluation to standardize on the company’s unified, AI-ready data infrastructure.
A U.S. hospitality company adopted NetApp technology for the first time through Amazon FSx for NetApp ONTAP to support large-scale VMware migration to AWS.
A U.S. public sector organization selected Azure NetApp Files as a part of its data modernization efforts, including for efficient VMware migrations.
A European IT service provider for pension insurance, in its first NetApp engagement, selected the unified storage to meet stringent security and resilience requirements for critical infrastructure.
NetApp recently displaced a competitor at a leading transportation agency with all-flash arrays for high-performance processing of massive video files and hybrid flash arrays for cost-effective long-term retention.
NetApp in the quarter won approximately 350 AI and data lake modernization deals, up significantly from a year ago in both number and deal size.
NetApp signed an agreement with Samsung Electronics to support its EDA environment and AI center of excellence.
A public sector organization awarded NetApp a strategic deal to modernize and expand its intelligence capabilities and deliver real-time analytics, leveraging NetApp AFX integrated with Nvidia SuperPOD.
NetApp secured a significant win with an Asian neocloud provider, supplying high-availability, secure and scalable storage for new customer-facing AI services.

NetApp also strengthened its leadership through strategic acquisitions to expand the capabilities of the NetApp Platform and broaden its addressable market, Kurian said, including:

DataPelago, whose Nucleus software engine enables high-performance, in-place data processing to help eliminate costly data movement and streamline AI readiness. “With this technology, we believe we can unlock additional value from the vast unstructured data already managed on our platform, giving customers fresh opportunities to accelerate their AI initiatives and maximize the potential of their existing data assets,” Kurian said.
JetStream, which provides cloud-native continuous protection and recovery of VMware workloads across diverse storage environments, with seamless replication to NetApp cloud offerings like Azure NetApp Files.

While AI was an important driver of NetApp’s growth, it wasn’t the only one.

Kurian, when asked by an analyst during the question-and-answer part of the conference call what NetApp saw demand-wise in the quarter, he replied that the demand profile was broad-based, with strength across every customer type, geography and vertical that was resilient to the component shortages.

“What we saw in the quarter was counter to what we see typically when prices of silicon and commodity costs go up dramatically,” he said. “Customers generally lean into tech refresh. We saw a ‘non-refresh.’ We saw the opposite. We saw much higher than the anticipated strength across all classes of customers. Within the largest customers, we saw some pockets of accelerated purchasing, but in many of those customers, we also saw them for less priority workloads and use cases.”

In response to an analyst question about the impact of AI vs. non-AI trends on demand, Kurian said growth was across the board and is expected to remain strong for multiple quarters, leading the company to raise its expectations for the entire year.

“There are AI-specific buildouts, for example, GPU-as-a-Service cloud, GPU environments within enterprises, and data lakes and modern data lake site environments being built particularly for GPU usage and for AI analytics,” he said. “There is, however, as other people have noted, including the hyperscalers, a broad-based modernization of a variety of adjacent workloads and infrastructure. So when you use AI, you also want to modernize your databases. You also want to modernize your unstructured data environment to get them ready. And we saw that happening pretty much across all the industries and all the customer segments.”

When asked about NetApp’s acquisition strategy, Kurian said the company is very disciplined in its approach as shown in its two latest acquisitions, which are tied to cloud and AI.

“With regard to DataPelago, it is really about AI-driven analytics and inferencing where we can accelerate the application processing adjacent to storage, providing customers a better inferencing solution top to bottom,” he said. “With regard to Jetstream, which we acquired at the start of Q2, it really strengthens our already strong position in VMware migrations to the cloud. We have really good solutions for customers that want to use NetApp to migrate, but for customers that are non-NetApp on-prem, we have a really good starting point with a DR [disaster recovery] and a cloud solution.”

NetApp By The Numbers

For its first fiscal quarter 2027, which ended July 31, NetApp reported total revenue of $2.03 billion, up about 30 percent over the $1.56 billion the company reported for its first fiscal quarter 2026.

This included hybrid cloud segment revenue, which includes the company’s all-flash and other storage arrays, of $1.82 billion, up about 30 percent over last year, and public cloud segment revenue of $206 million, up about 28 percent.

Looking at revenue from another angle, the company reported product revenue of $987 million, up from last year’s $654 million, and services revenue of $1.04 billion, up from last year’s $905 million.

Included in the total was all-flash storage revenue of $1.31 billion, up from $893 million, and hybrid-flash and other revenue of $510 million, up from $505 million.

NetApp’s Americas commercial market accounted for about 37 percent of total revenue during the quarter, down from 40 percent, while its U.S. public sector market held steady at 11 percent of total sales.

Total revenue beat analyst expectations by $190 million, according to Seeking Alpha.

NetApp also reported GAAP net income for the quarter of $375 million, or $1.88 per share, up significantly from last year’s $233 million, or $1.15 per share. On a non-GAAP basis, NetApp reported net income of $515 million, or $2.58 per share, up from last year’s $314 million, or $1.55 per share.

Non-GAAP earnings per share beat analyst expectations by 93 cents per share, according to Seeking Alpha.

Looking ahead, NetApp expects total second fiscal quarter 2027 revenue to be in the range of $2.025 billion to $2.175 billion, and GAAP earnings of $1.97 to $2.07 per share.

The company also increased its full fiscal year 2027 revenue in the range of $7.975 billion to $8.225 billion, and GAAP earnings of $7.35 to $7.65 per share.