On Wednesday, Evercore ISI maintained a positive outlook on Pure Storage (NYSE:PSTG), reiterating an Outperform rating and a $70.00 price target. The firm highlighted Pure Storage's strategic investment in GPU cloud provider CoreWeave, which was part of a recent funding round. Pure Storage also entered into a strategic partnership aiming to enhance CoreWeave's storage stack.
The collaboration involves Pure Storage deploying its storage solutions within CoreWeave's cloud environments, indicating that Pure's technology will not only be used for standard or less urgent storage needs but also for critical workloads. Pure Storage and CoreWeave have begun deploying jointly developed solutions in GPU production environments.
Although the financial details of the investment and the expected revenue or earnings per share (EPS) from the partnership were not disclosed, CNBC reported that CoreWeave has completed a $650 million secondary share sale. Pure Storage participated in this funding, alongside other investors including Cisco (NASDAQ:CSCO).
Investors' initial reaction to the partnership with CoreWeave has been lukewarm, as some had hoped for an alliance with a major cloud service provider like Azure, AWS, GCP, or Meta (NASDAQ:META). However, Evercore ISI suggests that the deal could lead to substantial revenue and EPS growth for Pure Storage in the long term, especially as CoreWeave is committed to spending approximately $8.7 billion to host its GPU clusters at Core Scientific's facilities.
The site modification plans by CoreWeave at Core Scientific's locations are expected to start in the second half of the 2025 calendar year. This timeline aligns with Evercore ISI's projections of a design win for Pure Storage by late 2024, with qualifications in early to mid-2025 and more extensive deployment towards the end of 2025 and into 2026.
Despite the possibility of near-term pressure on Pure Storage's stock due to the current lack of revenue or EPS guidance from the deal, Evercore ISI believes that the partnership will allow Pure Storage's solutions to be integrated into future deployments, which could support or even boost the company's revenue growth in the coming years.
In other recent news, Pure Storage has reported an 11% increase in its second-quarter revenue for fiscal year 2025, reaching $764 million. The company's subscription services annual recurring revenue (ARR) also saw a 24% rise, surpassing $1.5 billion. Despite longer sales cycles for larger Evergreen deals, Pure Storage has maintained its full-year revenue target of $3.1 billion.
In addition, Pure Storage has made a strategic investment in CoreWeave, an AI cloud services provider, aiming to enhance innovation in AI cloud services. The partnership will integrate Pure Storage's platform into CoreWeave's environments, offering customers high-performance storage within CoreWeave's AI supercomputer environments.
Analysts from Oppenheimer, TD Cowen, Needham, and Piper Sandler have provided their outlooks on Pure Storage. Oppenheimer initiated coverage of the company with an Outperform rating, citing potential gains from AI growth and unstructured data storage. However, TD Cowen, Needham, and Piper Sandler have reduced their price targets due to growth concerns, while maintaining their ratings.
Other recent developments include the introduction of next-generation Fusion architecture and AI storage-as-a-service for GPU clouds. The company also added 261 new customers in the second quarter and is focused on replacing traditional storage in hyperscaler data centers. Pure Storage's management is confident in its strategy and anticipates announcing a hyperscaler design win by the end of the year. The company's financial position remains robust with $1.8 billion in cash and investments.
InvestingPro Insights
Pure Storage's strategic investment in CoreWeave and their partnership aligns well with the company's current financial position and growth prospects. According to InvestingPro data, Pure Storage has a market capitalization of $16.43 billion and has shown strong revenue growth, with a 10.91% increase in quarterly revenue as of Q2 2025. This growth trajectory supports the potential for the CoreWeave partnership to contribute significantly to future revenue.
InvestingPro Tips highlight that Pure Storage holds more cash than debt on its balance sheet and has liquid assets exceeding short-term obligations. These factors provide the company with financial flexibility to make strategic investments like the one in CoreWeave. Additionally, net income is expected to grow this year, which could be further bolstered by the new partnership as it matures.
While the stock is trading at a high earnings multiple, with a P/E ratio of 117, this valuation may be justified by the company's growth prospects and strategic moves. Investors should note that Pure Storage has demonstrated a strong return over the last five years, indicating a track record of creating shareholder value.
For those interested in a deeper analysis, InvestingPro offers 12 additional tips for Pure Storage, providing a more comprehensive view of the company's financial health and market position.
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