Why NetApp (NTAP) Is an Overlooked 'Picks-and-Shovels' Winner in the 2026 AI Infrastructure Boom

The AI revolution is reshaping global enterprise landscapes, but few investors recognize the critical role of "picks-and-shovels" players-companies that provide the foundational infrastructure enabling AI innovation. NetApp (NTAP), a leader in data storage and management, is one such underappreciated beneficiary of this transformation. With its intelligent data infrastructure solutions, strong financial fundamentals, and growing analyst support, NetApp is uniquely positioned to capitalize on the AI infrastructure boom while trading at a significant discount to intrinsic value.

Strategic Position in AI-Ready Infrastructure

NetApp's vision for evolving storage into an active data foundation aligns perfectly with the demands of AI-driven enterprises. According to a global Enterprise AI maturity study by IDC, sponsored by NetApp, organizations with advanced data infrastructure-termed "AI Masters"-achieved 24.1% higher revenue growth and 25.4% cost savings compared to less mature peers. This underscores the criticality of data readiness in AI success. Yet, 84% of enterprises still struggle to optimize their storage for AI, highlighting a vast untapped opportunity.

NetApp's AFX modular all-flash platform and AI Data Engine are designed to bridge this gap. AFX enables independent scaling of performance and capacity for AI workloads, while the AI Data Engine connects structured and unstructured data through knowledge graphs, a key enabler for agentic AI. These innovations position NetApp as a critical enabler for enterprises navigating the complexities of AI deployment. The company's Intelligent Data Infrastructure further supports AI-native workflows by providing secure, scalable access across hybrid and cloud environments according to Forbes.

Undervalued Fundamentals and Revenue Growth

Despite its strategic relevance, NetApp remains undervalued by traditional metrics. A discounted cash flow (DCF) analysis suggests an intrinsic value of approximately $185 per share, a 40.3% discount to its current price. The stock trades at an 18.6x P/E ratio, below both the broader tech industry and peer group averages according to Simply Wall St. Recent financial results reinforce this undervaluation. In Q2 FY 2026, NetApp reported a record GAAP operating profit of $399 million, exceeding Wall Street expectations. Its Keystone Storage as a Service grew by 80% year-over-year, and deferred revenue increased 9% year-over-year, signaling strong adoption of high-margin subscription models.

Moreover, NetApp's collaboration with F5 has bolstered investor sentiment, particularly after a recent earnings beat. While challenges like declining traditional hardware sales and competition from hyperscalers persist according to Yahoo Finance, the company's pivot to cloud and AI-aligned solutions is driving margin expansion and long-term growth.

Analyst Backing and Market Projections

Analyst support for NetApp has grown amid the AI infrastructure boom. Zacks Research raised its FY2026 EPS estimate to $6.37, while projecting continued growth in subsequent years. Price targets from major firms further highlight optimism: Barclays increased its target to $134.00, and Morgan Stanley set a target of $117.00 according to Tickernerd. The median price target stands at $118.50, implying a potential upside of 1.1% to 10.9% from the current price according to Tickernerd.

The AI storage market itself is poised for explosive growth. By 2035, the AI-powered storage market is projected to expand from $36.28 billion in 2025 to $321.93 billion, driven by demand for high-performance, low-latency storage. NetApp's AI and cloud solutions already account for 70% of its revenue according to Investing.com, and its Q2 FY 2026 results showed a 3% year-over-year revenue increase to $1.7 billion, driven by AI infrastructure adoption. Analysts like Jake Seltz of Allspring Global Investments and Matt Sallee of Tortoise Capital Advisors have emphasized the importance of "pick-and-shovel" stocks like NetApp in underpinning the AI revolution according to TradeAlgo.

Risks and the Path Forward

NetApp is not without risks. Traditional on-premises hardware sales remain under pressure, and hyperscalers like AWS and Microsoft continue to innovate in AI infrastructure according to Yahoo Finance. However, NetApp's focus on hybrid and public cloud solutions, coupled with its leadership in AI-ready storage, positions it to outperform in a market where data governance and security are paramount according to Forbes. The company's operational discipline-evidenced by a 2% year-over-year reduction in operating expenses-further strengthens its resilience according to Futurum Group.

Conclusion

NetApp's intelligent data infrastructure is a linchpin for enterprises pursuing AI-driven transformation. With a compelling valuation, strong revenue growth, and growing analyst support, NTAP represents an undervalued "picks-and-shovels" play in the AI infrastructure boom. As AI adoption accelerates, investors who recognize NetApp's strategic role in enabling this shift may find themselves well-positioned for outsized returns.