Pure Storage, Inc. (PSTG): A Bull Case Theory

We came across a bullish thesis on Pure Storage, Inc. (PSTG) on Chip Stock Investor’s YouTube Channel. In this article, we will summarize the bulls’ thesis on PSTG. Pure Storage, Inc. (PSTG)’s share was trading at $75.41 as of January 13th. PSTG’s trailing and forward P/E were 198.45 and 35.84, respectively according to Yahoo Finance.

Pure Storage is currently facing investor skepticism following its latest earnings update, with concerns centered on future profitability rather than near term execution. The company provides flash storage-based data servers and software primarily to enterprise customers, a market that experienced a downturn roughly two years ago and is now entering a new growth cycle.

Expectations for Pure Storage rose meaningfully over the past year after it disclosed a relationship with a major hyperscaler, later revealed to be Meta, one of the world’s largest data center operators. This partnership, alongside early engagement with other hyperscalers, positions Pure Storage to expand flash storage adoption within hyperscale data centers, though much of this effort remains in a research and development phase.

In fiscal Q3 2026, the company reported revenue of $964 million, up 16% year over year, with annual recurring revenue rising 17% to $1.84 billion, while margins exceeded guidance and gross margin reached a strong 74%. Despite this, free cash flow was modest, highlighting investor concerns that rising R&D spending and elevated memory costs could pressure profitability.

Management expects full year revenue growth of 14 to 15%, with potential acceleration into high teens growth as hyperscaler deployments ramp, but uncertainty remains around monetization, as Pure increasingly earns software and licensing revenue while partners supply hardware. Ongoing NAND flash shortages further raise questions about cost pass through.

While GAAP profitability remains limited due to stock based compensation, management remains confident in long term returns and has announced a $400 million share repurchase program as a signal of confidence. Overall, Pure Storage represents a volatile but potentially rewarding long term investment as growth accelerates and its hyperscaler strategy matures.

Previously, we covered a bullish thesis on Pure Storage, Inc. (PSTG) by Magnus Ofstad in March 2025, which highlighted the market’s overreaction to conservative guidance, the strength of its platformization model, and durable subscription driven growth. PTSG’s stock price has appreciated by approximately 53.21% since our coverage. This is because the thesis played out as fundamentals remained intact despite near term sentiment pressure. Chip Stock Investor shares a similar thesis but emphasizes profitability concerns tied to hyperscaler driven R&D.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy NOW 

Disclosure: None.