• Nutanix is capitalizing on the growing demand for hybrid multi-cloud products and benefitting from a recent surge in VMware defectors.
• The company’s strong solid financial performance has encouraged optimism among investors, and analysts have raised price targets.
• Despite a relatively high valuation, it’s well-positioned to build on recent gains. 

Since its founding in 2009, Nutanix (NTNX) has evolved from an early disruptor in data center management into a key player in the hybrid multi-cloud business. Its software is becoming indispensable because it simplifies cloud infrastructure.

Following a strong Q4 earnings report, the company’s stock surged 12%, signaling heightened optimism among investors. With analysts consistently ranking Nutanix as a top pick and raising price targets, one question lingers: Can the company sustain its momentum, or has its valuation gotten too lofty? Let’s explore the history of the company’s impressive growth and seek to find out why shares might have more room to run.

From disruptor to leader in multi-cloud tech

San Jose, California-based Nutanix got its start by changing the way businesses manage data centers, replacing hardware-heavy systems with software-driven products that simplify operations and reduce costs. Over time, the company expanded its offerings to include data storage, virtualized applications and multi-cloud management. It now helps companies manage IT systems both in on-premises data centers and public clouds. The company’s shift to a subscription-based model has enabled it to generate stable, recurring revenue, helping to strengthen its financial position and improve profit margins, especially in software-as-a-service (SaaS).

Nutanix’s flagship technology—hyper-converged infrastructure (HCI)—combines computing power, storage and networking into a single platform that streamlines IT management. That makes it easier for businesses, especially large enterprises, to manage complex IT systems spread across different locations—whether in their own data centers or in the cloud. The company’s products and services are used by some of the world’s largest companies, including many in the Fortune 100, because of their scalability, flexibility and capacity to integrate with differing cloud requirements. As more companies shift to hybrid and multi-cloud systems, Nutanix’s expertise has become essential. 

Meanwhile, the Broadcom (AVGO) acquisition of VMware has left many customers rethinking their options. Nutanix is stepping in to fill the void by providing VMware defectors with flexible, reliable alternatives. At the same time, partnerships with tech heavyweights, like Cisco (CSCO), Dell (DELL) and Nvidia (NVDA), are amplifying Nutanix’s reach. These alliances are not just expanding its footprint—they’re solidifying its position as a major player in the hybrid multi-cloud arena.

From the beginning of 2025 through early March, Nutanix shares surged by about 25%, reflecting growing investor confidence in the company’s prospects. The momentum intensified after a strong Q4 earnings report, which triggered an additional 12% jump in stock price. This upward trajectory in both share price and market share illustrate the company’s strong prospects for growth. Recent market volatility has caused some pullback from the 2025 highs, though the stock remains up nearly 20% for the year, which shows its resilience.

Robust earnings and more new customers

Nutanix delivered impressive results for the second-quarter of fiscal 2025, which not only exceeded analysts’ expectations but also reinforced the company’s momentum. The solid earnings report, highlighted by a 16% year-over-year increase in revenue and 19% growth in annual recurring revenue (ARR), stoked investor optimism and sent Nutanix’s stock higher by another 12%. The surge reflected the market’s growing confidence in Nutanix’s ability to capitalize on a shift toward the hybrid multi-cloud.

In the second quarter, Nutanix’s revenue reached $654 million, up 16% compared to Q2 FY’ 24, while its ARR hit about $2 billion, reflecting strong demand for its SaaS offerings. The company also saw gains in gross margin and profitability, with non-GAAP operating income rising by 24% year-over-year. This solid performance was complemented by an ability to expand the customer base, adding 710 new clients—the highest quarterly increase in nearly five years. Its ability to deliver strong results, especially in subpar economic times, shows the strength of its business model. 

Moreover, Nutanix appears to be benefiting from the latest shift in market dynamics, as evidenced by the migration of VMware customers to the Nutanix family. This trend has driven increased demand for the company’s HCI (hyper-converged infrastructure) (HCI). Overall, the strong earnings results and growing customer base show Nutanix’s ability to execute on its strategy, and additional growth appears likely.

Prospects for growth may justify elevated valuation

Nutanix’s recent performance is undeniably impressive, with strong year-over-year growth and solid profitability. However, the company’s valuation isn’t necessarily “cheap.” The company’s non-GAAP P/E ratio is 48, considerably above the sector median of 24. The company’s price-to-sales (P/S) ratio of 8 is well above the sector’s median of 3. These elevated multiples suggest investors are betting on continued rapid growth. 

While these metrics may be seen as pricey, they reflect the market’s optimistic view of Nutanix’s near-term prospects. Despite the high valuation, Nutanix has garnered widespread analyst approval. Of the 18 analysts covering the stock, 17 rate it as a “buy” or “overweight,” with an average price target of $90 per share, suggesting considerable upside from the current price of $70 per share. 

The strong analyst sentiment is hard to overlook. For instance, Morgan Stanley’s Meta Marshall reiterated her “overweight” rating and boosted her price target to $85 per share, citing the company’s momentum. Similarly, Bank of America’s Wamsi Mohan pointed to Nutanix’s impressive customer acquisition, adding 710 new clients, and raised his price target to $95/share. These moves demonstrate analysts believe Nutanix is well-positioned to continue capitalizing on a favorable market. 

Investment takeaways

Nutanix’s robust growth and favorable analyst sentiment make it a compelling investment. While its valuation may seem high relative to peers, the company’s foothold in a fast-growing industry and expanding customer base provide a solid foundation for optimism. Additionally, its positive forward guidance suggests the momentum might not only continue—it could accelerate.

While there are valid concerns about its premium valuation, Nutanix’s momentum, particularly in hybrid multi-cloud and AI, offers a strong case for why it may continue to deliver solid returns  The only caveat to this thesis is a potential shift in the U.S. economic outlook because of near-term uncertainties relating to government austerity, including cost cutting and tariffs, which could weigh on growth and on stock market valuations.

Andrew Prochnow, Luckbox analyst-at-large, has more than 15 years of experience trading the global financial markets, including 10 years as a professional options trader.