Pure Storage (PSTG) is "more than equipped" to weather increasing memory costs given its long-term pricing deals with suppliers and strong procurement team, Oppenheimer said in a Tuesday note.

Artificial intelligence has driven both memory prices and shortages, and Oppenheimer said it expects the dilutive impact to Pure Storage's margins and earnings per share to be "substantially smaller than speculated."

The investment firm said its sensitivity analysis on the company's operating model, assuming a 50% year-on-year increase in memory costs, showed that Pure Storage can still sustain revenue growth enough to largely mitigate margin and EPS dilution in 2026.

In addition, Pure Storage could see higher demand and incremental revenue from Meta Platforms (META), Oppenheimer noted.

Oppenheimer reiterated its outperform rating and $120 price target on Pure Storage.

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