Why is NetApp stock sliding today?

NetApp stock is sliding 8.1% in pre-open trading after the data infrastructure company’s fiscal first-quarter 2027 earnings report, released after Wednesday’s market close, sparked a sharp after-hours sell-off that is carrying into today’s session. While the company beat consensus estimates across the board — posting revenue of $2.03 billion against expectations of roughly $1.84 billion and non-GAAP EPS of $2.58 against estimates near $2.12 — investors quickly zeroed in on the details that fell short of the headline strength.

Two concerns dominated the post-earnings reaction. First, free cash flow declined 35% year-over-year to $401 million, a notable deterioration in cash generation quality even as reported earnings surged. Second, and perhaps more consequentially, the company’s raised full-year guidance implies a dramatic slowdown in the back half of the fiscal year, with revenue growth rates expected to compress from roughly 26% in Q1 and 23% in Q2 to approximately 9–10% in the second half — a deceleration that raised questions on the earnings call about whether current demand reflects durable structural growth or a pull-forward effect. Additionally, the number of AI and data lake deals closed in Q1 came in at approximately 350, down from roughly 500 in the prior quarter, even as individual deal sizes grew.

The broader market context offers little relief for NetApp today. The S&P 500 is essentially flat and the Nasdaq is slightly negative, meaning there is no broad technology rally to cushion the stock-specific selling pressure. Evercore ISI reiterated an In Line rating following the results, acknowledging the record Q1 performance but flagging the implied second-half deceleration as a key overhang for the shares.

Taken together, the combination of a sharp free cash flow decline, a guidance structure that implies a significant growth step-down in the back half of FY2027, and investor skepticism about the sustainability of AI-driven demand has overwhelmed what was, on the surface, a record-setting quarterly performance — sending the stock to $166.11 in pre-market, well below its prior close of $180.77 and far from its 52-week high of $209.06.