AI is transforming enterprise IT at an unprecedented pace. To capitalize on this booming trend, NetApp, Inc. NTAP recently acquired DataPelago, a startup specializing in AI data infrastructure. The deal expands NetApp's intelligent data infrastructure portfolio by bringing GPU-accelerated data processing directly to the storage layer, allowing organizations to process data where it resides instead of copying it to separate AI infrastructure. The acquisition is likely to strengthen NetApp's competitive position in the rapidly growing AI infrastructure market. NetApp has already enhanced its ecosystem through partnerships with Cisco, Google Cloud, Red Hat and SK Telecom. Adding DataPelago extends that strategy.
At the core of the acquisition is Nucleus, DataPelago's universal data processing engine. Instead of transferring massive datasets into separate GPU clusters, Nucleus performs accelerated computing directly where enterprise data already resides. Its architecture uses heterogeneous computing by intelligently leveraging both CPUs and GPUs, enabling workloads to run within the storage environment itself. This approach creates what NetApp calls "zero-copy activation" of enterprise data. Rather than copying data multiple times across different AI systems, organizations can prepare datasets, govern sensitive information, execute transformations and feed AI models without creating additional copies.
According to NetApp, DataPelago's technology provides significant efficiency gains. Potential benefits include up to 10x faster processing compared to traditional architectures, infrastructure cost reductions of up to 80%, better GPU utilization, lower networking overhead and less storage duplication. For enterprises investing heavily in costly GPU infrastructure, these improvements could significantly boost return on investment.
However, competition remains intense. Major players such as Hewlett Packard Enterprise HPE, Teradata Corporation TDC and cloud providers are all investing heavily in AI infrastructure.
Competitive Pressure Clouding NTAP’s Growth Run
Acquisitions, such as Stemma, enhance Teradata's capabilities in data search and exploration, providing added value to its customers. Teradata is building on this foundation as it expands the Enterprise Vector Store to unify structured and unstructured data within a single governed platform, capable of supporting large vector volumes and high concurrent query demand from AI agents. Recent enhancements include multimodal support spanning text, images and audio, as well as additional agentic features through ecosystem integrations. The company is also developing an agentic framework, including an MCP Server, to enable querying, analysis and management of data with full context.
HPE has pursued buyouts to strengthen higher-margin hybrid IT models that blend on-premises infrastructure with cloud-like consumption. Hewlett Packard completed the acquisition of Juniper Networks in July 2025 to fortify its Networking business. In 2024, it acquired Morpheus Data, which has enhanced its GreenLake capabilities. In 2023, HPE acquired four businesses — OpsRamp, Axis Security, Athonet and Pachyderm. In 2021, it acquired Ampool, Zerto, Determined AI and CloudPhysics. The deal has expanded its capabilities and product portfolios in the fast-growing cloud space, including software-defined networks and converged and hyper-converged infrastructure. Its focus on a hybrid IT model will drive growth in the long run.
NTAP Price Performance, Valuation & Estimates
Shares of NetApp have gained 5% in the past month against the Computer-Storage Devices industry’s decline of 19.1%.
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Regarding the price/book ratio, NTAP is trading at 24.04, higher than the industry’s multiple of 17.3.
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The Zacks Consensus Estimate for NTAP’s earnings for fiscal 2027 has been revised upward over the past 60 days.
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NTAP currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).