Data storage company NetApp Inc. delivered earnings and revenue that came in ahead of Wall Street’s forecasts and raised its guidance for the full year, citing strong demand from customers pursuing artificial intelligence projects.

Investors liked what they saw, and the company’s stock moved higher in extended trading.

The company reported second-quarter earnings before certain costs such as stock compensation of $2.05 per share, easily beating the Street’s target of $1.88 per share, while revenue for the period totaled $1.71 billion, up 3% from a year earlier and above the $1.69 billion consensus estimate. Adjusted gross margin came in at 72.6%, above the 71% estimate.

All told, NetApp reported net income of $415 million in the quarter, rising from a $392 million profit in the year-ago period.

NetApp specializes in data storage and management software, catering to both on-premises and cloud environments. Besides selling storage hardware, it offers a unified data storage software solution that spans hybrid information technology environments, as well as specialized cloud services for managing multicloud data. It’s also focused on data protection and offers specialized storage arrays and services for resource-intensive AI workloads.

NetApp Chief Executive George Kurian (pictured) said the company’s close alignment with customers’ data initiatives has helped it to capitalize on its “significant” competitive advantages. “We remain confident that our visionary approach to a data-driven future will enable us to outpace market growth and capture additional market share,” he said.

The highlight of the quarter was NetApp’s annual user conference, NetApp Insight 2025, where the company built on its previously announced vision of an “intelligent data infrastructure” that’s designed to support AI workloads, launching the all-new AI Data Engine. It was announced alongside a new disaggregated, all-flash storage system for AI applications called NetApp AFX. At the event, the company explained that it sees the new AI Data Engine and AFX appliance as the foundation of new “AI factories,” or massive clusters of dedicated infrastructure that can support any kind of AI model.

During the event, Kurian stopped by SiliconANGLE Media’s mobile livestreaming studio theCUBE, where he explained that the company is particularly interested in supporting new “agentic” AI workloads. The AI Data Engine and AFX hardware were both designed to support the nuances of AI agents, he said.

“The first [criteria] is to have high-quality, curated data on which the agents are operating so that they don’t end up with a situation related to drift or poisoning of their results,” Kurian told theCUBE. “The second is they need to be able to have guardrails that are created from actually having a good understanding of the meaning of the data they’re trying to access, as well as the relationships between the entities that they’re trying to access.”

Kurian’s full interview is available here:

The company has seen strong interest in the new AFX appliance from customers, Kurian told analysts on a conference call today. But he said that it’ll likely be several months before it starts seeing the financial impact of new deployments. However, the AI Data Engine and other AI services announced during NetApp Insight may have a more immediate impact on the company’s fortunes.

“Despite the choppy macro, customers are spending on AI projects and on data infrastructure modernization to get ready for AI,” Kurian told analysts. “They are implementing additional cyber resilience protection. We feel good about our alignment to customer spending.”

That explains why NetApp is confident enough to lift its full-year forecast for both earnings and revenue. It said it now expects fiscal 2026 earnings of $7.75 to $8.05 per share, up from an earlier projection of $7.60 to $7.90 per share. It’s also expecting revenue of $6.63 billion to $6.88 billion. Those numbers compare much more favorably with Wall Street’s forecast, which calls for earnings of $7.75 per share on revenue of $6.76 billion.

For the current quarter, NetApp’s guidance is more or less in line with the Street’s expectations. The company said it’s looking for earnings of $2.01 to $2.11 per share on sales of $1.62 billion to $1.77 billion, versus the Street’s targets of $2.06 in earnings and $1.71 billion in revenue.

NetApp’s stock gained more than 5% in extended trading, but remains almost 4% down in the year to date.

Photo: SiliconANGLE