Pure Storage: Losing Patience As Margins Wane (Rating Downgrade)

Gary Alexander
31.13K Followers
(10min)

Summary

  • Pure Storage's Q1 results showcased ongoing margin pressure from a highly competitive, commoditized data storage industry, limiting pricing power and growth potential.
  • Despite AI hype, Pure Storage's revenue growth remains tepid. Current trends may even be supported by pull-forwards in infrastructure investments, and are not necessarily sustainable.
  • Rising R&D expenses are eroding operating profits, while the company must spend more just to maintain modest growth rates.
  • At current valuations above 30x P/E, Pure Storage is too expensive given its operational challenges—I'm downgrading to sell and recommend locking in gains.

Data Lake Digital Transformation Artificial Intelligence Technology

To say that the Q1 earnings season has been volatile is no understatement. Against the backdrop of very choppy stock markets and consistently shifting headlines on tariffs, investors have digested earnings reports with far more trepidation than usual.

Pure Storage, Inc. (

This article was written by

31.13K Followers
With combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contributor on Seeking Alpha since 2017. He has been quoted in many web publications and his articles are syndicated to company pages in popular trading apps like Robinhood.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

About PSTG Stock

SymbolLast Price% Chg
Market Cap
PE
Yield
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on PSTG

Related Stocks

SymbolLast Price% Chg
PSTG
--