Pure Storage appears ready to take advantage of AI shift to inference: Citi

[Pure Storage headquarters in Silicon Valley]
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Citi Research considers Pure Storage (NYSE:PSTG [https://seekingalpha.com/symbol/PSTG]) well positioned to take advantage of artificial intelligence inferencing.

"We remain constructive given continued secular flash and subscription offering growth, plus TAM expansion opportunity," said Citi analyst Asiya Merchant, in an investor note. "Pure at inflection point post initial hyperscaler win (on-track, expected lengthy gestation); importantly, additional hyperscaler talks nascent."

Citi also reiterated its Buy rating and increased its price target to $110 from $85 due to "heightened sentiment given widespread acceleration of inference-led AI and unstructured data deployments with 30%+ EPS growth expectations ahead."

AI training consists of teaching larger language models to use large datasets to learn, while inferencing is the process of using a trained model to make predictions or conclusions.

Last week, Raymond James raised the price target on Pure Storage's stock to $99 from $88 while maintaining its Outperform rating.

"Our model now incorporates assumptions for royalties from Meta (META [https://seekingalpha.com/symbol/META])," said analyst Simon Leopold. "Management has offered little disclosure, but has said the Meta project is officially in production and that it would ship 2 exabytes this year and double-digit exabytes in FY27."

Pure Storage is expected to release its third-quarter financial results and outlook on November 26. A consensus estimate expects the company to report adjusted earnings per share of $0.58 and GAAP EPS of $0.25. The consensus calls for revenue of $955.51M.

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