Nutanix Stock Can Get a Big Lift From Agentic AI Growth, AMD Investment

Nutanix (NTNX) appears to be well-positioned to benefit from the rapid proliferation of agentic AI, given Advanced Micro Devices' (AMD) partnership with the company, its investment in NTNX stock, and a number of new products that Nutanix has launched. There's also a meaningful chance that AMD or another Big Tech player will decide to acquire Nutanix. Finally, Nutanix has multiple positive catalysts in store, including potential market share gains and increasing demand for its offerings amid the AI boom.

With all that in mind, here's what investors should know about Nutanix right now. 

About Nutanix Stock

Nutanix is a "hybrid cloud computing leader” with a software platform that allows more than 29,000 enterprise customers to utilize applications, AI, and data. In the company's fiscal third quarter ended in April, revenue climbed 10% year-over-year (YOY) to $703.1 million, while annual recurring revenue (ARR) jumped 15% YOY to $2.43 billion. Operating income, excluding certain items, advanced by $19.4 million to $156.5 million. Finally, boding very well for the longer-term outlook, bookings soared 20% YOY based on total contract value.

Shares of NTNX stock have a forward price-to-earnings (P/E) ratio of 69.8 times. Currently, the company's market capitalization is $17.7 billion. 

AMD Can Help Nutanix Benefit From the Agentic AI Surge

In March, Nutanix launched the Nutanix Agentic AI solution. The product provides enterprises with a cloud operating model that allows them to create and utilize AI in general as well as agentic AI in particular.

According to one estimate, the agentic AI market is expected to expand at a compound annual growth rate (CAGR) of 44.6% between 2025 and 2032, reaching $93.2 billion. In light of this huge potential growth and Nutanix's ability to market its agentic AI solution to an existing customer base, Nutanix's agentic AI offering looks poised to be a positive game changer for the firm.

Earlier this year, Nutanix and AMD announced a strategic partnership to develop an agentic AI platform, and AMD agreed to spend as much as $100 million on developing and marketing the offering. These funds, along with AMD's expertise and many high-level industry connections, should help make the platform effective and widely used.

As of June 30, AMD also reported holding more than 4.13 million shares of NTNX stock. Accordingly, the chipmaker has another reason to help make Nutanix's agentic AI product a big success.

Nutanix Could Become a Takeover Target

In October 2022, The Wall Street Journal reported that a number of entities were weighing purchasing Nutanix, noting that the firm was believed to be exploring a sale. At the time, the market capitalization of Nutanix was around $5 billion. Today, the market cap is closer to $18 billion. Still, many tech heavyweights could afford to pay $25 billion to $30 billion for the company.

By acquiring the company, AMD or another chip giant could more easily sell its semiconductors to Nutanix's customers as well as market Nutanix's offerings to their existing customers. If it were to buy the company, Palantir (PLTR) could also broaden its AI offerings and enter the cloud sector while gaining cross-selling opportunities. With the demand for its offerings likely to continue amid the AI boom, many large tech firms could become interested in acquiring Nutanix.

The Bottom Line on NTNX Stock

Earlier this year, Barclays reported that Nutanix was in the “middle innings” of a VMware market share gain opportunity, so the company may continue to be boosted by this trend in the medium term. During its last earnings call, Nutanix also noted that it was benefiting from a trend of businesses looking to expand their use of AI. With the latter development likely to continue for the foreseeable future, the company should keep generating strong growth going forward, as its powerful bookings surge indicates.

All told, given Nutanix's strong growth and multiple positive catalysts, NTNX stock appears to be an attractive opportunity. With many positive attributes in tow, long-term growth investors may want to consider shares as the AI boom continues.