Needham: Google Private Cloud Reports Create Nutanix Buying Opportunity

Nutanix Inc NTNX stock jumped Tuesday after selling off by 12 percent Monday following media reports of a major new competitor in the private cloud market.

What Happened

The Information reported that Alphabet, Inc. GOOG GOOGL will expand its cloud business from the public to private space, targeting enterprise customers with private data center offerings. Later on Monday, a representative from Google said definitively that it is “not building customized appliances for external sale” and “not competing with our partners in this area.”

Why It’s Important

While the report certainly spooked the market, Needham analyst Jack Andrews said the idea of Google and Nutanix being competitors seems very unlikely based on the two companies’ ongoing partnership. Andrews says the partnership is mutually beneficial, and Nutanix is allowing Google access to enterprise customers that are skeptical of vendor lock-in to one specific provider.

“We believe this partnership also aligns with NTNX’s vision to seamlessly migrate from HCI to cloud and back again (or vice versa),” Andrews said in a Tuesday note. 

Nutanix shares were up 7.62 percent at $49.97 at the time of publication Tuesday. 

What’s Next

The statement from Google should clear up any potential confusion over the unsubstantiated media reports, and Monday’s sell-off is a buying opportunity for Nutanix investors, Andrews said.

Investors will be on the lookout for any additional evidence that Google is in fact building customized hardware with server, storage and networking capabilities.

Needham reiterated a Buy rating and $71 price target for Nutanix. 

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