NetApp (NTAP) has been in focus after its fiscal Q4 2026 report, which included higher revenue and net income than a year earlier, new guidance for fiscal 2027, and expanded Cisco and NVIDIA partnerships.

At a share price of $160.66, NetApp has given investors a 36.46% 1 month share price return and a 50.90% year to date share price return. The 1 year total shareholder return of 59.57% and 3 year total shareholder return of 133.21% point to strong momentum that recent earnings, dividend confirmation and new AI focused partnerships with Cisco and NVIDIA appear to have reinforced despite the pullback in the last week.

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With the stock up sharply on the back of record results, AI partnerships and fresh guidance, the key question now is whether NetApp still trades at a discount or if the market is already pricing in future growth.

Most Popular Narrative: 4.3% Undervalued

NetApp's most followed narrative pegs fair value at about $167.93 using an 8.63% discount rate, slightly above the last close at $160.66, which frames the current debate.

Substantial growth in Keystone Storage-as-a-Service (up ~80% year-over-year) and increased deferred revenue (+9% year-over-year) indicate growing preference for subscription-based and as-a-service storage, supporting higher revenue visibility and margin expansion as mix continues to shift toward high-value services.
Expanding portfolio of AI-ready innovations, operating efficiencies, and consistent improvements in Public Cloud gross margins (now guided to 80 to 85%, up from 75 to 80%), are expected to further enhance profitability and drive long-term earnings growth.

Want to see what is baked into that fair value? The most followed narrative leans heavily on recurring revenue, richer margins and a tighter share count. Curious which specific earnings and revenue paths are assumed, and how they justify a higher valuation than today? The full narrative lays out the numbers behind that story.

Result: Fair Value of $167.93 (UNDERVALUED)

However, there is still the risk that pressure on gross margins from higher memory costs or rising competition in cloud storage could undercut the current, AI-driven optimism.

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Another View: What The P/E Ratio Is Saying

While the SWS DCF model suggests NetApp is about 5.5% undervalued at $160.66 versus an estimated fair value of $170.06, the P/E ratio tells a more cautious story. At 24.7x earnings, the stock sits just above the Global Tech average of 24.6x, well below a peer average of 40.6x but also below a fair ratio of 31.5x that the market could move toward over time. For investors, that mix of a small premium to the wider sector, a discount to peers, and headroom to the fair ratio raises a simple question: is this more of a margin of safety or a signal that expectations are already high?

Next Steps

With both risks and rewards in play, sentiment around NetApp can feel split. Consider reviewing the numbers yourself and weighing the 3 key rewards and 1 important warning sign promptly.

Looking for more investment ideas?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.