Seagate Technology: AI-Driven Storage Growth
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 51 minutes ago
0mins
Source: Fool
- Significant Revenue Growth: Seagate's fiscal Q3 2026 revenue surged 44% year-over-year to $3.11 billion, demonstrating robust market demand driven by AI applications, with expectations for continued strong growth in the coming quarters.
- Margin Expansion: Adjusted gross margin increased from 36.2% in the prior year to 47%, reflecting the company's success in cost control and pricing strategies, thereby enhancing investor confidence in its profitability.
- Nearline Business Dominance: Nearline products accounted for nearly 90% of total shipments in the March quarter, with nearline capacity almost fully allocated through 2027, providing the company with a stable revenue source and competitive advantage in the market.
- Strong Cash Flow: Seagate generated $953 million in free cash flow in fiscal Q3 2026, supporting a reduction of approximately $1.1 billion in debt, indicating a healthy financial position and the potential for continued investment in technological innovation and market expansion.
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Analyst Views on STX
Wall Street analysts forecast STX stock price to fall
18 Analyst Rating
14 Buy
3 Hold
1 Sell
Moderate Buy
Current: 1018.800
Low
150.00
Averages
310.39
High
465.00
Current: 1018.800
Low
150.00
Averages
310.39
High
465.00
About STX
Seagate Technology Holdings plc provides mass-data storage infrastructure solution. The Company’s principal products are hard disk drives, commonly referred to as disk drives, hard drives (HDDs). In addition to HDDs, the Company produces a range of data storage products, including solid state drives (SSDs), solid state hybrid drives, storage subsystems, as well as a scalable edge-to-cloud mass data platform. Its HDD products are designed for mass capacity storage and legacy markets. Mass capacity storage involves use cases, such as hyperscale data centers and public clouds, as well as emerging use cases. The Company’s HDD and SSD product portfolio includes Serial Advanced Technology Attachment, Serial Attached SCSI and Non-Volatile Memory Express based designs to support a variety of mass capacity and legacy applications. Its systems portfolio includes storage subsystems for enterprises, cloud service providers, scale-out storage servers and original equipment manufacturers.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Seagate Technology: AI-Driven Storage Growth
- Significant Revenue Growth: Seagate's fiscal Q3 2026 revenue surged 44% year-over-year to $3.11 billion, demonstrating robust market demand driven by AI applications, with expectations for continued strong growth in the coming quarters.
- Margin Expansion: Adjusted gross margin increased from 36.2% in the prior year to 47%, reflecting the company's success in cost control and pricing strategies, thereby enhancing investor confidence in its profitability.
- Nearline Business Dominance: Nearline products accounted for nearly 90% of total shipments in the March quarter, with nearline capacity almost fully allocated through 2027, providing the company with a stable revenue source and competitive advantage in the market.
- Strong Cash Flow: Seagate generated $953 million in free cash flow in fiscal Q3 2026, supporting a reduction of approximately $1.1 billion in debt, indicating a healthy financial position and the potential for continued investment in technological innovation and market expansion.
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Seagate Technology: AI-Driven Storage Growth
- Significant Revenue Growth: Seagate's fiscal Q3 2026 revenue surged 44% year-over-year to $3.11 billion, demonstrating robust market demand driven by AI applications, with expectations for continued strong growth in the coming quarters.
- Margin Expansion: Adjusted gross margin increased from 36.2% in the prior year to 47%, reflecting the company's success in cost control and pricing strategies, thereby enhancing investor confidence in its profitability.
- Nearline Business Dominance: Nearline products accounted for nearly 90% of total shipments in the March quarter, with nearline capacity almost fully allocated through 2027, providing the company with a stable revenue source and competitive advantage in the market.
- Strong Cash Flow: Seagate generated $953 million in free cash flow in fiscal Q3 2026, supporting a reduction of approximately $1.1 billion in debt, indicating a healthy financial position and the potential for continued investment in technological innovation and market expansion.
See More
Mixed Performance in US Stock Indices Amid Energy Sector Pressure
- Mixed Market Performance: The S&P 500 Index rose by 0.11%, the Dow Jones Industrial Average increased by 0.57%, while the Nasdaq 100 Index fell by 0.18%, indicating a complex market sentiment particularly influenced by the pressure on energy stocks due to declining oil prices.
- Oil Price Impact: WTI crude oil prices dropped over 3% to a 3.25-month low, easing inflation expectations and providing support for stocks and bonds, reflecting a cautious market outlook on future economic growth.
- Weak Housing Data: US May housing starts fell by 15.4% month-over-month to a six-year low of 1.177 million, below the expected 1.430 million, indicating potential challenges for economic recovery stemming from a sluggish real estate market.
- FOMC Meeting Focus: Market attention shifts to the two-day FOMC meeting, where rates are expected to remain unchanged, but the press conference led by new Chair Kevin Warsh will be pivotal in shaping future monetary policy directions.
See More
Applovin Declines 25% Year-to-Date, Worst S&P 500 Performer
- Applovin Underperformance: Applovin's stock is down 3.0% today and has fallen approximately 25.0% year-to-date, indicating a weak market position that could undermine investor confidence and lead to capital outflows.
- Market Dynamics: As the worst-performing component of the S&P 500, Applovin's struggles reflect competitive pressures and market challenges, suggesting a need for strategic adjustments to improve performance.
- Other Company Movements: Palo Alto Networks is down 2.9% today, highlighting volatility in the cybersecurity sector, while Seagate Technology Holdings has risen 6.6%, indicating strong demand for storage solutions that may attract investor interest.
- Overall Market Trends: The increased volatility in the S&P 500 index, with Applovin's poor performance contrasting sharply with other components, could impact overall market sentiment and investment strategies.
See More
Zscaler Shares Drop 3.7%, Down 44.2% YTD
- Poor Stock Performance: Zscaler's shares fell 3.7% today, marking a year-to-date decline of 44.2%, indicating a weakening competitive position that could impact investor confidence and future financing capabilities.
- Market Dynamics Analysis: As the worst-performing component in the Nasdaq 100, Zscaler's struggles reflect challenges within the tech sector, potentially prompting investors to reassess its long-term growth prospects.
- Other Company Movements: In contrast to Zscaler, Applovin's stock decreased by 3.0% today, while Seagate Technology Holdings rose by 6.6%, highlighting varying market reactions that could influence portfolio allocations.
- Investor Focus: Zscaler's ongoing decline may lead analysts and investors to scrutinize its financial health and future strategies to evaluate its viability in a highly competitive market.
See More
U.S. Stock Futures Steady as Investors Await Fed Decision
- Fed Decision Focus: Investors are shifting their attention to the first interest rate decision by new Fed Chairman Kevin Warsh, with expectations that rates will remain in the 3.50%-3.75% range, which could significantly influence future monetary policy directions.
- SpaceX Stock Surge: SpaceX (SPCX.O) shares rose by 10%, positioning the company to potentially surpass Amazon (AMZN.O) as the world's fifth-largest firm, indicating strong growth prospects in the space and AI sectors.
- Memory Chip Stocks Rise: Shares of Micron Technology (MU.O), Western Digital (WDC.O), and Seagate Technology (STX.O) increased between 2.9% and 4.8%, reflecting optimistic market expectations for memory chip demand, which could drive profitability for these companies.
- Dow Jones Record High: The Dow Jones index (.DJI) reached a record high following President Trump's announcement of a preliminary agreement between the U.S. and Iran, although lingering doubts about the deal could impact future oil prices and inflation expectations.
See More
Western Digital Stock Surges 16%, Attracts Market Attention
- Stock Surge: Western Digital (WDC) shares surged 16% on Monday, extending a total gain of 33% over the last three sessions, indicating strong market demand and investor confidence that could further drive the company's market capitalization growth.
- Sentiment Shift: On Stocktwits, sentiment for WDC shifted from 'bearish' to 'extremely bullish', with message volume skyrocketing to over 2,900, reflecting a significant increase in retail investor interest that may attract more capital inflows.
- Analyst Optimism: Morgan Stanley raised its price target for WDC from $488 to $650, although this target is below Monday's closing price of $653.53, yet analysts express increased confidence in the strengthening demand for hard disk drives, which is expected to drive future performance growth.
- Industry Recovery: Following the U.S.-Iran peace deal, global market sentiment improved, leading to a broad rally in memory chip stocks, with Western Digital's strong performance potentially leading the industry's recovery and further boosting investor confidence in the sector.
See More
