The founder who called legacy storage unfit for AI just sold to NetApp
NetApp is folding Manchester's PEAK:AIO into ONTAP as its third startup buy in three months, an AI-era architecture bought by the legacy vendor its founder said could not do the job. Shareholders have already paid: the stock closed above the $191 target Morgan Stanley just raised and the $192.50 analyst mean, at 26 times book.
Vincent Jiang · 3 min read
He ruled out legacy storage, then sold to it
Mark Klarzynski built PEAK:AIO in Manchester on a blunt premise: "Legacy storage was never going to work at the scale and cost point that real AI projects demand" 1. On 25 September 2026, NetApp, third by revenue in IDC's quarterly enterprise storage tracker 2, said it will fold his metadata and parallel-file architecture into ONTAP, the software at the core of a vendor that has sold enterprise storage for more than three decades 3. No price was disclosed 2.
Who collects
If regulators clear the deal, Pembroke VCT, the London-listed venture capital trust that backed PEAK:AIO's 2025 funding round, books its first exit from a technology investment, and Klarzynski his third as a founder 1. The return is described only as significant; neither side has put a figure on it 12. For the trust's shareholders, the win is real and unquantified. That is the clean half of this trade.
Who already paid
The other half is the stock. NTAP closed at $197.79 on 18 September 2026 4, above the $191 Morgan Stanley target and above the $192.50 analyst mean 5. That $191 was the bank's second lift of the year, from $137, after it dropped Underweight for Equalweight 45. The stock trades at 25.9 times book against an industry multiple of 15.4 6. The market charged NetApp for the AI wave before management spent a dollar catching it.
Underneath sits a real quarter: record revenue of $2.03 billion, up 30%, all-flash array revenue up 47% to $1.31 billion, and roughly 350 AI and data lake modernization deals 76. Operating cash flow still fell 25% to $503 million, and free cash flow fell 35% 7.
A plateau, then the record: NetApp quarterly revenue, eight quarters to July 2026
Data
| Net revenue | |
|---|---|
| Q3 '24 | $1.66B |
| Q4 '24 | $1.64B |
| Q1 '25 | $1.73B |
| Q2 '25 | $1.56B |
| Q3 '25 | $1.71B |
| Q4 '25 | $1.71B |
| Q1 '26 | $1.95B |
| Q2 '26 | $2.03B |
Three deals chasing the natives
The spree is the tell: DataPelago in July, JetStream Software in August, PEAK:AIO in September 27, beside a guidance raise of about $650 million to $8.1 billion at the midpoint 67. DDN, an AI-native rival, is collaborating with NVIDIA on GPU-initiated data access 9, and NetApp's own technology chief singles out Lattice, the parallel-NFS metadata server PEAK:AIO built with Los Alamos 10. NetApp is buying the architecture the GPU-era builders shipped first.
The other side
Chief executive George Kurian calls it "a record-setting start to the year, exceeding guidance on every metric" 7. Analysts on the call kept asking how much of that record was customers buying early ahead of price rises; the quarter held an extra week, product gross margin fell 150 basis points, and NetApp will not size the prebuying 8. The deal release itself commits to no products 3.
The record quarter generated less cash than the one before it
- Operating cash flow
- Free cash flow
Data
| Operating cash flow | Free cash flow | |
|---|---|---|
| Q3 '24 | $0.11B | $0.06B |
| Q4 '24 | $0.39B | $0.34B |
| Q1 '25 | $0.68B | $0.64B |
| Q2 '25 | $0.67B | $0.62B |
| Q3 '25 | $0.13B | $0.08B |
| Q4 '25 | $0.32B | $0.27B |
| Q1 '26 | $0.95B | $0.9B |
| Q2 '26 | $0.5B | $0.4B |
The number that decides it
Fiscal Q2 is guided from $2.025 billion to $2.175 billion in revenue 7. Land near the top and the demand looks structural. Fall short, and part of the record quarter was borrowed from later ones 8.
How this brief was made
01Gathered & sourced272 channels · 1,473 articles▾
Agents swept 272 channels and ingested 1,473 articles, then de-duplicated and ranked them for signal.
02Verified & cross-validated11 claims · 18 data feeds▾
Every one of 11 load-bearing claims was checked against primary sources, with 18 live data feeds reconciling the figures and charts.
- 1Intelligent CIO, "NetApp proposes acquisition of PEAK AIO in AI infrastructure deal", 28 September 2026
- 2SDxCentral, "NetApp expands AI infra push with Peak:AIo acquisition", 28 September 2026
- 3NetApp via Business Wire on Yahoo Finance, "NetApp Announces Intent to Acquire PEAK:AIO to Advance Scalable AI Infrastructure Architecture", 25 September 2026
- 4ad-hoc-news.de, "NetApp Inc. stock gains as Morgan Stanley raises target after strong Q1", 28 September 2026
- 5MT Newswires via Yahoo Finance, "Morgan Stanley Adjusts Price Target on NetApp to $191 From $173, Keeps Equalweight Rating", 3 September 2026
- 6Zacks Investment Research via Yahoo Finance UK, "Can AI and Flash Demand Power NetApp's Raised FY27 Outlook?", 25 September 2026
- 7NetApp via Business Wire on 01net, "NetApp Reports First Quarter of Fiscal Year 2027 Results", 3 September 2026
- 8Trefis via Yahoo Finance, "Did NetApp Borrow Its Record Quarter From The Rest Of The Year?", 17 September 2026
- 9Business Wire, "DDN Collaborates with NVIDIA to Advance GPU-Initiated Data Access for Next-Generation AI", 4 August 2026
- 10CRN, "NetApp Bets On Peak:AIO Acquisition To Provide New Performance Firepower In AI Data Battle", 25 September 2026
- 11Sharadar quarterly fundamentals, from NetApp's SEC filings, retrieved 29 September 2026
03Reviewed & edited1 human editor▾
One editor read the draft against the evidence, tuned the framing, and signed off before it shipped.
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