Pure Storage, Inc. (NYSE:PSTG) shares are trading lower on Wednesday. Oppenheimer analyst Param Singh initiated coverage on the company with an Outperform rating and a price target of $70.

The analyst's bullish stance is due to the company's position as a key beneficiary of the growing demand for unstructured data used in AI applications.

Singh says that the data storage market is shifting towards all-flash arrays (AFA), expected to grow at an 8.5% CAGR from 2023 to 2028, reaching $17 billion.

Pure Storage is well-positioned to benefit from this trend, leveraging its software advantage in writing data directly to flash memory, adds the analyst.

Singh further says that the leadership in storage-as-a-service (STaaS) offerings aligns with the industry's shift toward as-a-service platforms.

These factors should drive strong customer growth, increased expansion activity, and continued improvement in operating margins, writes the analyst.

Overall, the analyst projects the company's revenue to grow at a 12.2% CAGR from FY24 (ending in January) through FY27, significantly outpacing the total addressable market (TAM) growth.

Today, Pure Storage disclosed that it has made a strategic investment in CoreWeave, the AI Hyperscaler, to boost innovation in AI cloud services.

As part of the partnership, customers will be able to utilize the Pure Storage platform within CoreWeave Cloud, further advancing AI capabilities in the cloud.

The company will release the third quarter of FY25 results on December 3.

Investors can gain exposure to the stock via First Trust Cloud Computing ETF (NASDAQ:SKYY) and iShares Future Cloud 5G and Tech ETF (NYSE:IDAT).

Price Action: PSTG shares are down 0.84% at $49.73 at the last check Wednesday.

Photo by Ground Picture on Shutterstock

• Kyndryl, Dell, Nvidia Join Forces To Launch AI Private Cloud For Japanese Enterprises