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NetApp’s High-Margin Public Cloud Business Is Scaling Fast — Is This The Hidden Engine Behind Future Profit Growth?

NetApp’s latest financial performance in the third quarter of fiscal year 2026 paints a mixed picture, balancing solid growth drivers with industry challenges. On the one hand, the company reported a 4% year-over-year increase in revenue, reaching $1.71 billion, with operating income and non-GAAP earnings per share hitting record highs. Excluding the divested Spot business, revenue grew by 6%, highlighting a promising trajectory in core operations. The solid revenue growth was attributed to accelerating demand across various segments, including hybrid cloud solutions and emerging AI workloads, which are becoming substantial contributors to NetApp’s portfolio. Despite these positive indicators, several challenges temper the full financial outlook. One persistent issue is the dynamics in the memory pricing market. NetApp has faced fluctuations in memory component prices, primarily NAND and DRAM, due to supply chain constraints affecting the broader technology industry. In response, the company has implemented price increases across its product offerings.