NetApp Continues With Shareholders' Returns Amid AI-Driven Cycle

NetApp (NTAP) is managing capital returns while focusing on emerging AI, cloud and All-Flash growth engines.

In the last reported quarter, the company reported revenues of $1.71 billion, which increased 3% year over year. Non-GAAP operating income increased 11.6% year over year to $530 million. Non-GAAP operating margin was 31.1%, up from 28.6%. Non-GAAP earnings of $2.05 per share, which beat the Zacks Consensus Estimate by 8.5%. The figure increased 9.6% year over year.

NetApp exited the quarter ended Oct. 24, 2025, with $3 billion in cash, cash equivalents, and investments, and long-term debt was $2.486 billion. Net cash from operations was $127 million, while free cash flow was $78 million.

NetApp, Inc. Price, Consensus and EPS Surprise

NetApp, Inc. price-consensus-eps-surprise-chart | NetApp, Inc. Quote

Against this backdrop, NTAP returned $353 million to its shareholders as dividend payouts and share repurchases in the fiscal second quarter. The company also announced a dividend of 52 cents per share payable on Jan. 21, 2026, to its shareholders of record as of Jan. 2.

NetApp remains focused on capturing a bigger share of the AI cycle and is investing accordingly. Customer adoption is increasing, with roughly 200 AI infrastructure and data-modernization deals closed in the fiscal second quarter. It spent nearly $49 million in the purchase of property and equipment in the fiscal second quarter.

The launch of AFX and the AI Data Engine expands its enterprise-grade AI data capabilities. It has also introduced NetApp Keystone Storage-as-a-Service (STaaS) for enterprise AI.

At present, continuation of buybacks and dividends while funding platforms seems the way forward for NetApp. However, whether it remains optimal depends on NetApp’s ability to convert durable demand into strong margins and effective investments and continued shareholder value.

At present, NTAP carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Let’s Look at Shareholder Returns for Competitors

Seagate Technology Holdings plc (STX) is emphasizing shareholder returns in fiscal 2026, supported by improving operating performance and stronger cash flow visibility. STX resumed share repurchases, marking a notable shift in capital allocation.

In the first quarter of fiscal 2026, the company paid $153 million in dividends and repurchased shares worth $29 million. Following a solid September quarter, STX hiked its quarterly dividend 3% to 74 cents per share in October 2025. STX also reiterated its commitment to returning at least 75% of free cash flow to shareholders over time. Seagate's business model changes and strong product pipeline position it well for better profitability and cash flow in fiscal 2026.

Western Digital Corporation (WDC) remains committed to returning value to its shareholders while continuing to invest strategically in technology and growth opportunities. In the last reported quarter, management brought back nearly 6.4 million shares for $553 million. It paid $39 million in dividends.

The company’s free cash flow generation and gross margin expansion reflect strong demand execution and cost management. In the fiscal first quarter, it generated $672 million in cash from operations compared with $34 million in the prior-year quarter. In a strong vote of confidence in the business momentum and financial stability, its board of directors approved a 25% increase in the quarterly cash dividend, raising this from 10 cents to 12.5 cents per share.

Pure Storage (PSTG) exited the fiscal third quarter, which ended on Nov. 2, with cash and cash equivalents and marketable securities of $1.5 billion, the same as of Aug. 3, 2025. Cash flow from operations amounted to $116 million in the fiscal third quarter compared with $97 million reported in the prior-year quarter. Free cash flow was $52.6 million compared with $35.2 million in the year-ago quarter. In the fiscal third quarter, Pure Storage returned $53 million to its shareholders by repurchasing 0.6 million shares. It recently announced an incremental $400 million buyback plan in addition to its existing authorization.

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