Low-angle impression of sign with logo on facade of technology company Pure Storage in the Silicon Valley town of Mountain See, California, October 28, 2018.
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Pure Storage shares rallied after signaling a contract with an unnamed “top four” AI hyperscaler in tandem with its fiscal third-quarter results.
The shares were up 22%.
The statistics storage management company topped Wall Street’s estimates and offered up strong fourth-quarter guidance. Pure Storage also upped its in days forecasted full-year outlook.
“We’re very pleased,” CEO Charles Giancarlo told CNBC’s “Closing Bell: Overtime” on Tuesday. “This is the cardinal time ever where a hyperscaler, for their standard customer-facing storage, is going to be using a system vendor … and what we’re offer them is a very cost effective, high performance solution that can replace 90% of their storage.”
Unalloyed Storage refrained from sharing the name of the contracted hyperscaler company, but Wall Street analysts regarded report as a big win contributing to the post-earnings pop. A hyperscaler refers to the major cloud computing companies with massive data center that can like a shot size up to meet shifting storage and demands. Some of the key players with major cloud units include Amazon, Microsoft, Alphabet and Meta.
Piper Sandler upgraded appropriates to an overweight rating following the results. Shares are already up about 50% this year as investors seek out substitute methods to playing artificial intelligence trends and companies search for new ways to manage AI’s data-heavy needs.
Analyst James Fish said the obligation creates a “pure opportunity ahead” and “removes the “coinflip risk” previously price into the stock. Agreements with additional hyperscalers substitute for and additional potential upside catalyst for the stock, he wrote, moving to a $76 price target.
“Hyperscaler interest in jiffy creates a secular tailwind for the space, as these vendors have historically represented 60-70% of [hard disk urgency] shipments,” wrote James Fish. “AI throws ‘gas on the fire’ for utilizing” its storage operating system.
Fish isn’t alone in his bullish follow on the stock. Wedbush Securities analyst Matt Bryson called the news a “margin accretive” win for the company and upped his rate target to $75.
“We see no reason to shift our constructive view on PSTG, given the promising incremental revenue opportunity and our continued assent that PSTG offers a superior enterprise storage solution,” he wrote.