Nutanix (NASDAQ:NTNX) shares rose Wednesday after William Blair upgraded the stock to Outperform from Market Perform, saying the "game-changing disruption" at VMware (NYSE:VMW) is pushing customers to the company.
Analysts explained that the disruption in the infrastructure software space stemming from Broadcom's recent acquisition of VMware is turning out to be more significant than they expected.
"Broadcom is taking VMware's top accounts direct; raising prices; eliminating traditional product bundles, incentives, and deal registrations; removing the ability to sell perpetual licenses; and lifting the threshold for the roughly 50,000 VMware VARs to qualify for the Broadcom partner program," they wrote.
The firm sees Nutanix as a top beneficiary of the changing environment. "While we expected Nutanix to benefit from this disruption, the VAR community sees a multiyear runway for the Nutanix Cloud Platform (HCI) and Nutanix AHV (Acropolis Hypervisor) to take market share from VMware (from vSAN and ESX, respectively)."
According to William Blair, while renewal quotes for VMware are valid until February, VARs say customers are already starting to look at alternatives and planning away from their historical dependence on VMware's dominant ESX hypervisor — "creating a seminal moment for Nutanix AHV."