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Pure Storage (PSTG) stays close to its flatline today despite receiving a downgrade to "Equal-Weight" from "Overweight" at Morgan Stanley. The data storage platform provider has enjoyed excellent appreciation on the year, nearly doubling YTD, reflecting a healthy appetite for all-things AI.

Briefing.com notes that PSTG has been pouncing on the transition among businesses worldwide to the cloud and their seemingly insatiable demand to ensure they are competitively positioned to take advantage of a secular AI trend. As a result, PSTG recently returned to double-digit revenue growth in Q1 (Apr). Despite the stock hovering around all-time highs, it still has room to run. PSTG is a compelling AI play, and it has the added advantage of benefiting from a shift toward becoming more digital, making pullbacks offer attractive entry points.

• Advances in AI have opened several doors for PSTG across many market segments. High-performance data storage warehouses are growing, putting PSTG in a prime position to add to its accelerating revenue growth. Over a longer period, upgrading all enterprise storage to cloud storage provides an even more lucrative opportunity.
• PSTG is different from others in its field because it does not require different operating systems software to tackle various storage requirements. Its platform offers uniformity and integration across different data environments. This characteristic leads to power savings, materially reducing costs for data center operators. Given the magnitude more power AI workloads require, those who can save the most power without performance loss will likely pull ahead over the long term.
• Shares of PSTG have been on a tear primarily due to AI, offsetting the lingering issues surrounding the macroeconomic environment. Management remarked last month that AI-related spending might be pressuring other parts of IT budgets, keeping the storage market from noticing any major inflection. However, despite this challenging environment, PSTG has performed relatively well, consistently exceeding analysts' quarterly earnings and revenue forecasts, underscoring the company's ability to reignite revenue growth once broader demand conditions turn.

Like others in the tech industry enjoying record-high stock prices despite a constrained economic backdrop, PSTG has been benefiting from investors' interest in buying now in anticipation of a significant ramp-up next year, fueled largely by AI. While shares are by no means cheap -- PSTG currently trades at around 40x forward earnings -- its business model showcases a competitive edge for becoming the leader in AI and cloud data storage. PSTG recently boasted a notable win with Meta Platforms (META), showcasing its technological advantage. With big tech pouring bundles of cash into building their AI infrastructure, companies like PSTG stand to benefit big, allowing for further room to run over the long term.