Seagate stock jumps as AI demand drives earnings beat, bullish outlook

Seagate Technology STX shares rose about 3% in trading on Wednesday after the data storage company reported stronger-than-expected fiscal fourth-quarter results and issued an upbeat outlook.

The stock rebounded after falling 8.5% in the previous session.

Despite a 23% decline in July, Seagate shares have gained nearly 404% over the past 12 months.

For the quarter, Seagate reported adjusted earnings of $5.71 per share, more than double the $2.59 reported a year earlier and above analysts' expectations of $5.10, according to FactSet.

Revenue climbed 49% year over year to $3.6 billion, exceeding the consensus estimate of $3.5 billion.

Looking ahead, the company forecast adjusted earnings of $7.30 per share for the fiscal first quarter of 2027, well ahead of Wall Street estimates of $5.85.

Seagate also projected revenue of $4.1 billion, compared with analysts' expectations of $3.8 billion.

Commenting on the outlook, CEO Dave Mosley said, “As AI accelerates data generation and its value, we see durable long-term demand for mass capacity storage.”

Analysts raise price targets as pricing power strengthens

The results prompted several Wall Street firms to raise their price targets, citing stronger pricing, improving profitability and continued demand for AI-related storage infrastructure.

Bernstein SocGen increased its price target to $1,350 from $1,000 while maintaining an Outperform rating.

The brokerage said Seagate's quarterly earnings exceeded both its own estimates and consensus expectations, supported by accelerating price increases and stronger cost reductions from heat-assisted magnetic recording (HAMR) technology.

The firm noted that price per exabyte continued to rise at a faster pace and attributed the company's performance to improving pricing and lower production costs enabled by HAMR.

Rosenblatt also reaffirmed its Buy rating and lifted its target price to $1,400 from $1,300 following what it described as a “clean beat-and-raise.”

The brokerage said management's comments indicate the hard disk drive industry has entered a “new pricing regime,” supported by widening supply-demand imbalances and expectations for sequential improvements in revenue, margins and profitability throughout fiscal 2027.

Citi raised its target price to $1,300 while maintaining a Buy rating, citing growing adoption of HAMR technology.

Wells Fargo increased its target to $1,180 and reiterated its Overweight rating, saying Seagate's latest results reinforced its expectation that nearline storage demand can continue expanding at the upper end of the 25% to 30% annual growth range.

AI demand supports long-term growth outlook

Morningstar said Seagate's latest results strengthen its view that the company is entering a multi-year period of higher-margin, more predictable growth driven by artificial intelligence.

According to the research firm, Seagate's nearline storage capacity is fully committed through 2026, largely allocated for 2027, while discussions for 2028 are already underway, providing unusually strong revenue visibility.

Morningstar said AI infrastructure spending is reshaping the traditionally cyclical hard disk drive market by supporting steadier demand and greater pricing discipline.

The firm expects Seagate to benefit from AI-driven demand, higher-capacity HAMR drives, disciplined industry supply and improving data center demand.

It also expects those trends to support mid-single-digit annual price increases through the end of the decade and contribute to structurally higher margins compared with previous hard disk drive cycles.