Nutanix’s quarterly results exceeded analysts’ expectations, but this is not what is driving the share price up, but rather the very high expectations for the coming quarter.

This quarter, Nutanix is ​​doing what few technology companies can do: releasing its financial results for the past quarter without a drop in its stock price.

The fact that the results are bright green undoubtedly helps. Nutanix reported revenue of $548 million in the fourth quarter of fiscal 2024, up 11 percent year-on-year. In addition, the HCI specialist was able to slightly increase the average contract duration and annual revenue from recurring contracts also increased by 22 percent.

For the full fiscal year, Nutanix raised $2.15 billion, an increase of fifteen percent over the previous year. Until the operating margin rises again to 15.5 to 17 percent.

Good transition

All this shows that Nutanix is ​​doing well. After a turbulent period in which the company transformed into a SaaS provider, investors have regained confidence.

Broadcom’s takeover of VMware is also helping: Broadcom is driving away customers large and small by focusing only on the largest parties, and Nutanix offers one of the few realistic alternatives.

More than high growth

Against this backdrop, it seems unsurprising that Nutanix’s share price is rising significantly. However, the main catalyst for this is not the annual report, but the outlook for next year. Nutanix expects to generate revenue of between $2.435 billion and $2.465 billion in 2025, more than the $2.43 billion forecast by analysts.

The last few months show that hype-sensitive investors demand nothing less: green results and sky-high expectations that exceed official expectations. Those who make profits and grow, but at a less extreme level, lose confidence.

Good numbers, falling share price

We can see this clearly in the case of (former) competitors Pure Storage and NetApp, both of which operate in the storage world, where Nutanix also has its roots. These companies also have green prospects, with billions in sales in sight.

Pure Storage turned a loss in this quarter last year into a profit ($35.6 million), but risked mentioning that expected growth would be slightly lower than originally expected.

For NetApp, the situation is even stranger: the company has exceeded all Wall Street expectations and is raising its growth expectations for the coming year. Growth beyond the high growth already expected does not seem to be enough for investors, and the stock has fallen after the close of trading.

Disconnected from reality

Above all, all this shows that tech stocks are currently trading more than usual based on hype signals and gut feelings of uninformed parties. The big tech companies are doing well these days, but the stock market’s reaction does not reflect this reality.