Why Nutanix (NTNX) Is Rallying Today

Nutanix (NTNX) is surging 11% after the company delivered stronger-than-expected fiscal second-quarter results and predicted that its revenue would increase about 17% during its current fiscal year. A number of Wall Street analysts reacted positively to the company’s results and guidance.

NTNX develops and markets software that eases cloud complexities.

A data center operator working on a rack of servers, emphasizing the company’s cloud services.

The Highlights of NTNX’s Financial Results and Guidance

NTNX’s Q2 revenue jumped 16% versus the same period a year earlier to $654.7 million. The latter figure was $11.8 million above analysts’ average estimate. Its Q2 earnings per share came in at 56 cents, meaningfully above analysts’ mean outlook of 47 cents.

The company raised its full-year revenue and free cash flow guidance. The midpoint of its fiscal 2025 revenue guidance range now calls for an increase of about 17% in its sales. And at the midpoint of its FY25 fiscal free cash flow guidance of $650 million to $700 million, its free cash flow margin would come in at roughly 27%.

Bank of America’s Reaction

According to Bank of America, NTNX delivered “strong” results, as the bank noted that the company had added 710 new customers last quarter. The bank expects the company to continue adding new customers at a rapid rate while gaining market share.

The bank increased its price target on the shares to $95 from $85 while reiterating a Buy rating on NTNX.

While we acknowledge the potential of NTNX, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NTNX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.