Seagate stock slides 7% as AI demand sparks capacity fears

Shares of Seagate Technology STX fell sharply on Monday after comments from CEO Dave Mosley raised investor concerns that the company may struggle to keep pace with surging artificial-intelligence-related demand for data storage solutions.

Seagate shares dropped roughly 7% during trading after Mosley discussed the company’s manufacturing strategy at the JPMorgan Global Technology, Media and Communications Conference.

The selloff came despite continued optimism surrounding long-term AI-driven demand for storage infrastructure, as investors reacted negatively to signs that Seagate is reluctant to aggressively expand manufacturing capacity.

The broader semiconductor and AI infrastructure sector also faced pressure Monday amid rising Treasury yields, inflation concerns, and ongoing geopolitical tensions tied to the Middle East conflict.

CEO comments spark manufacturing concerns

At the JPMorgan conference, Mosley said Seagate had intentionally delayed adding manufacturing capacity until the company became confident that long-term forecasts tied to AI-related storage demand were sustainable.

“Now it appears that not only are the forecasts real, but the demand is significantly higher,” Mosley said.

However, investors appeared concerned after Mosley suggested that building new manufacturing facilities would take too long and could eventually create excess capacity risks.

“We're targeting mid-20s% growth, which is enormous CAGR, the only way we're gonna get there is to be able to go through those technology transitions... That's really the way we're driving it. If we took the teams off and started building new factories or bringing up new machines, it would just take too long,” Mosley stated.

Earlier this month, Mosley similarly told Bloomberg that Seagate’s strategy focuses on improving technology and manufacturing efficiency rather than expanding physical factory capacity.

“The way for us to get to much bigger exabyte production is to jump through these technology trends, not to stop and say, ‘Okay, I’ll build another factory,’ because that’s a long lead time,” Mosley said.

“The company’s focus is on “making our entire manufacturing operations much more efficient, getting more exabytes out,” Mosley said. “And then we’re showing that to customers, and they’re saying, ‘I’ll take it.’”

AI storage demand continues surging

Investor concerns emerged against the backdrop of a rapidly expanding AI infrastructure market that has fueled strong demand for data storage, memory chips, and semiconductor hardware.

Seagate remains closely tied to the AI infrastructure buildout through its mass-capacity data storage products, which are increasingly used in hyperscale data centers supporting artificial intelligence workloads.

At the same time, the broader memory and storage industry faces tightening supply conditions.

Additional pressure on Seagate shares came from concerns surrounding Samsung Electronics, a key supplier within the memory-chip ecosystem.

Samsung workers are currently threatening labor action that could potentially disrupt memory-chip production, adding further uncertainty to the global semiconductor supply chain.

Shares of other AI-related semiconductor companies, including Micron Technology, Nvidia, Broadcom, and Intel, also moved lower during Monday’s session.

Rising yields add pressure to tech sector

Broader macroeconomic conditions also contributed to weakness across technology stocks.

The yield on the US 10-year Treasury note climbed to approximately 4.63% on Monday, reaching its highest level since early 2025 as investors reacted to rising inflation concerns tied to elevated oil prices and ongoing geopolitical tensions involving Iran.

Higher Treasury yields often pressure high-growth technology stocks by reducing the attractiveness of future earnings expectations.

Despite Monday’s sharp decline, analysts remain broadly optimistic about Seagate’s long-term growth prospects tied to artificial intelligence infrastructure spending.

Last week, Evercore raised its price target on Seagate to $1,000 from $750 while maintaining an “Outperform” rating, citing efficient supply management, technological advancements, and what the firm described as a “robust” demand backdrop.