Is Nutanix (NTNX) Cheap Following Its Russell Growth Index Removals?

Index removals put Nutanix stock under the spotlight

Nutanix (NTNX) has been removed from several Russell Growth benchmarks, a shift that can prompt index trackers to rebalance holdings and adjust exposure. This may put short term attention on the stock and its valuation.

See our latest analysis for Nutanix.

Against this index removal backdrop, Nutanix’s recent share price moves tell a mixed story. A 45.53% 90 day share price return contrasts with a 29.77% decline in total shareholder return over the past year and stronger results over three and five years. This suggests momentum has recently picked up even as longer term holders have experienced a bumpier ride.

If you are looking beyond Nutanix to see where else growth and valuation stories may be emerging in enterprise tech, it could be worth scanning 52 AI infrastructure stocks as a starting point for other ideas.

Bulls point to Nutanix’s revenue and net income growth and a discounted intrinsic value estimate, while bears focus on premium multiples and index exclusion pressure. The key question is which side the current valuation really supports next.

Most Popular Narrative: 5.7% Undervalued

Nutanix is trading at $53.76 compared with a narrative fair value of $57.01, which frames the current index driven volatility against a modest implied discount.

Ongoing enterprise digital transformation and demand for scalable solutions, as evidenced by large multi-year deals, major wins like Finanz Informatik, and increasing contributions from Global 2000 customers, provide a robust pipeline for future "land and expand" motions, improving both revenue visibility and opportunities for net new ARR expansion.

Read the complete narrative. Read the complete narrative.

Want to see what sits behind that fair value for Nutanix? It rests on compound revenue growth, rising profit margins, and a future earnings multiple that assumes continued enterprise cloud adoption.

Result: Fair Value of $57.01 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this Nutanix narrative could be knocked off course if server supply constraints persist or if renewal trends soften, weighing on revenue conversion and cash flow.

Find out about the key risks to this Nutanix narrative.

Another View: Nutanix on Earnings Multiples

The earlier narrative frames Nutanix as 5.7% undervalued relative to a $57.01 fair value, but the earnings multiple tells a different story. At a P/E of 52.7x versus a fair ratio of 36.3x, the stock carries a rich premium, which could matter if sentiment turns.

That premium also stands out against both the US Software industry on 28.8x P/E and peers on 51.7x. This suggests limited margin for error rather than obvious upside. The key question for you is whether Nutanix can justify this higher bar long enough for the earlier fair value thesis to play out.

See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

With mixed signals on Nutanix’s valuation and sentiment, do you want to rely on headlines or your own judgment? Act while the data is fresh and weigh both sides of the story by checking the 3 key rewards and 3 important warning signs

Looking for more investment ideas beyond Nutanix?

If you only stop at Nutanix, you could miss other stocks that better match your goals. Keep your shortlist open and actively test fresh ideas.

• Target potential mispricings by scanning companies that screen as high quality yet priced below their estimated worth through the 45 high quality undervalued stocks.
• Strengthen portfolio resilience by reviewing stocks that pair financial robustness with cleaner balance sheets via the solid balance sheet and fundamentals stocks screener (47 results).
• Hunt for underfollowed opportunities by checking the screener containing 18 high quality undiscovered gems before the crowd pays closer attention.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com