Nutanix Downgraded by Barclays and Morgan Stanley, Yet Analysts Still See Significant Upside
Wall Street Adjusts Outlook on Nutanix as Growth Trajectory Comes Under Scrutiny
Cloud computing specialist Nutanix, Inc. (NASDAQ: NTNX) finds itself at a crossroads, according to recent analyst actions. While the company is still widely viewed as a key player in the enterprise cloud infrastructure market, its stock has faced a recalibration of expectations on Wall Street.
Barclays analyst Tim Long set the tone on January 15, moving his rating on the stock from Overweight to Equal Weight. In a concurrent move, Long slashed the firm's price target from $64 to $53. This new target, however, still implies a potential 26% gain from current trading levels, highlighting a persistent belief in the stock's value proposition.
"Nutanix is in the middle innings of its opportunity to capture market share from VMware," Long noted, referencing the ongoing industry shift following Broadcom's acquisition of VMware. "While the displacement narrative remains intact, we see growth rates moderating, which may challenge the company's ability to maintain its recent momentum."
This sentiment was echoed just days earlier by Morgan Stanley's Sanjit Singh, who also downgraded Nutanix to Equal Weight from Overweight. Singh made a more aggressive cut to his price target, lowering it from $82 to $62. This revised figure suggests a striking 47.6% upside, aligning closely with the median Wall Street analyst upside projection of 50%, based on coverage from 17 firms.
In his research note, Singh acknowledged Nutanix's strengths, calling it "an attractive business" that has achieved a formidable scale with over $2.5 billion in annual revenue. His primary concern centers on visibility. "As we look toward 2026, clarity on the company's top-line growth is diminishing, introducing near-term uncertainty," he wrote. Despite this caution, Singh affirmed a positive long-term view of Nutanix's growth prospects.
Market Context and Company Profile
Nutanix provides a hybrid multicloud software platform globally, offering solutions like its Cloud Infrastructure, AHV hypervisor, and Kubernetes data services. Its position has been bolstered by industry-wide efforts by enterprises to simplify complex IT environments, a trend accelerated by the VMware transition.
Investor Voices
"The downgrades are a reality check, not a death knell. The targets still project major upside, which tells you the core story is strong. This is a classic 'pause that refreshes' in a long-term transition play." – Michael R., Portfolio Manager
"Slowing growth visibility is analyst-speak for 'we don't know where the next leg of growth is coming from.' The VMware replacement cycle is a one-time tailwind. What's the plan for 2026 and beyond? The market hates uncertainty." – Sarah Chen, Tech Analyst at a hedge fund
"This is frustrating! The fundamentals haven't changed—they're executing and taking share. Wall Street just has a short attention span and can't handle a quarter or two of digestion. The 50%+ upside some see proves the disconnect between price and value." – David Park, Retail Investor
"It's a prudent move by the analysts. The easy money from the VMware saga has been made. Now Nutanix needs to prove it can build a durable, growing business atop that foundation. The next few quarters are critical." – Priya Sharma, Independent Market Strategist
Disclosure: This analysis is based on publicly available information and analyst reports. It is for informational purposes only and does not constitute investment advice.