Core Viewpoint - Kerrisdale Capital is shorting Pure Storage Inc. due to its belief that the company is poorly positioned to capture significant market share in cloud and AI infrastructure spending [1][3]. Company Positioning - Kerrisdale Capital describes Pure Storage's core product as having little chance of adoption by hyperscalers, suggesting that the company's narrative around its new quad-level cell (QLC) flash-based products is unrealistic and ignores fundamental storage architecture principles [2][3]. - The report highlights Pure Storage's modest growth rate, declining competitive differentiation, and weak positioning in the AI and cloud infrastructure sectors, asserting that the company's product capabilities are "narrow and replicable" [3][4]. Market Dynamics - Despite securing a deal with Meta, Kerrisdale believes that Pure Storage's prospects for partnerships with other major hyperscalers are bleak, predicting that the company will lose market share to emerging ultra-high-performance data infrastructure competitors [3][4]. - The report emphasizes that Pure Storage's products are undifferentiated and that its market share has remained stagnant for years, characterizing the company's core business as a "melting ice cube" in the context of ongoing enterprise workload migration to the cloud [4]. Financial Outlook - Kerrisdale anticipates that Pure Storage shares will trend lower as the company struggles to gain market share in the core enterprise storage market. The report notes that Pure Storage's software business primarily involves maintenance and support, which does not justify a Software as a Service (SaaS) multiple [5]. - Currently, Pure Storage is trading at approximately 41.3 times forward earnings, with a year-to-date stock gain of about 24% and a 62% increase over the past year [5][6].