Seagate Technology Shares Surge 17% on Strong Q3 Results and Upbeat Outlook
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Should l Buy STX?
Source: seekingalpha
- Significant Earnings Growth: Seagate Technology reported strong third-quarter results, with shares soaring approximately 17% in premarket trading, primarily driven by surging demand in cloud computing and AI, leading to an increased annual revenue growth target from low to mid-teens to at least 20% over the next few years.
- Sustained Investment from Cloud Customers: The company achieved its tenth consecutive quarter of revenue growth from cloud customers, with the Remaining Performance Obligations (RPO) of cloud service providers nearly doubling to a staggering $1.1 trillion, indicating robust future growth potential.
- Strategic Contract Finalization: Seagate has secured Exabyte-scale supply agreements with nearly all major cloud and hyperscale customers, with nearline capacity almost fully allocated through 2027, and is finalizing build-to-order contracts that ensure revenue stability moving forward.
- Strong Market Demand: The growing need for inference-based applications has led to increased interest from sovereign and neo cloud data centers for Seagate's enterprise nearline drives and system solutions, enhancing the company's competitive position in the market.
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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: 595.860
Low
150.00
Averages
310.39
High
465.00
Current: 595.860
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's Earnings Growth Outlook is Optimistic
- Strong Market Demand: In Q2 of fiscal 2026, data center customers accounted for 87% of Seagate Technology's shipments, indicating robust demand for high-capacity hard disk drives (HDDs) and solid-state drives (SSDs), which is expected to persist into 2026 and beyond, providing sustained revenue growth for the company.
- Upward Earnings Guidance: Seagate's non-GAAP earnings per share jumped 53% year-over-year to $3.11 in Q2 of fiscal 2026, with guidance for fiscal 2026 set at $3.40, indicating a remarkable 79% increase, which highlights the company's strengthening profitability.
- Price Increases Driving Profits: The shortage of HDDs led to a 60% price increase for high-capacity storage drives between November 2025 and February 2026, positioning Seagate favorably in negotiations with customers, and suggesting that its earnings growth may exceed analysts' expectations of 58% for fiscal 2027.
- Investment Value Realization: With a current P/E ratio of 33, below the tech sector's 43, and considering its earnings growth rate significantly outpaces the market, Seagate's stock price could rise by 50% by the end of 2026, potentially turning a $1,000 investment into $1,500.
See More
Seagate Technology Shares Surge 17% on Strong Q3 Results and Upbeat Outlook
- Significant Earnings Growth: Seagate Technology reported strong third-quarter results, with shares soaring approximately 17% in premarket trading, primarily driven by surging demand in cloud computing and AI, leading to an increased annual revenue growth target from low to mid-teens to at least 20% over the next few years.
- Sustained Investment from Cloud Customers: The company achieved its tenth consecutive quarter of revenue growth from cloud customers, with the Remaining Performance Obligations (RPO) of cloud service providers nearly doubling to a staggering $1.1 trillion, indicating robust future growth potential.
- Strategic Contract Finalization: Seagate has secured Exabyte-scale supply agreements with nearly all major cloud and hyperscale customers, with nearline capacity almost fully allocated through 2027, and is finalizing build-to-order contracts that ensure revenue stability moving forward.
- Strong Market Demand: The growing need for inference-based applications has led to increased interest from sovereign and neo cloud data centers for Seagate's enterprise nearline drives and system solutions, enhancing the company's competitive position in the market.
See More
Seagate Technology Shares Surge Amid Earnings Recovery
- Earnings Beat: Seagate Technology reported adjusted earnings of $4.10 per share and revenue of $3.11 billion for the fiscal third quarter ending April 3, marking a substantial 44% year-over-year increase, which has significantly fueled the stock's rally.
- Demand Recovery: The company highlighted a resurgence in mass-capacity storage demand, particularly from cloud and hyperscale customers, with nearline HDD shipments and exabyte growth improving as clients resumed spending post-inventory correction, laying a solid foundation for future growth.
- Price and Margin Improvement: Tight supply and disciplined production have bolstered Seagate's pricing power, while a shift towards higher-capacity drives has lifted gross margins to 47% and operating margins to 37.5%, showcasing the company's effective cost control measures.
- Strong Momentum: Seagate's stock has surged from approximately $63 to around $659 over the past year, with a recent 17.7% increase, reflecting robust market momentum and earnings growth expectations, as the company aims for a minimum annual revenue growth target of 20%.
See More
Tech Earnings Reports Drive Market Gains
- Seagate's Strong Performance: Seagate Technology reported a Q4 adjusted EPS forecast of $4.80 to $5.20 and revenue of $3.35B to $3.55B, significantly exceeding Wall Street expectations, which drove shares up 18%, indicating robust demand and growth potential in the storage market.
- NXP Semiconductor Growth: NXP Semiconductors reported Q1 revenue of $3.18B, a 12% year-over-year increase, and guided for Q2 adjusted EPS of $3.29 to $3.72 and revenue of $3.35B to $3.55B, both surpassing analyst estimates, reflecting strong performance across multiple end markets.
- Bloom Energy Beats Expectations: Bloom Energy achieved a non-GAAP EPS of $0.44 and revenue of $751.1M in Q1, up 130.4% year-over-year, and raised its FY2026 revenue outlook to $3.4B to $3.8B, showcasing strong product demand and market confidence.
- Starbucks Sustained Growth: Starbucks reported a 6.2% increase in global comparable sales for Q2, with revenue rising 9% to $9.5B and adjusted EPS of $0.50 beating expectations, while anticipating global and U.S. comparable sales growth of over 5%, demonstrating its ongoing competitiveness in the market.
See More
Federal Reserve Decision and Big Tech Earnings in Focus
- Fed Decision Impact: Investors are closely watching the Federal Reserve's rate decision, which is expected to significantly influence market sentiment, particularly ahead of major tech earnings reports, potentially leading to stock market volatility.
- Big Tech Earnings: Major tech companies including Microsoft, Alphabet, Meta, and Amazon are set to report earnings, with the market anticipating that substantial investments in artificial intelligence will translate into real revenue growth, thereby impacting overall market performance.
- Stock Movements: Seagate's shares surged 20% due to a strong outlook for AI storage demand, while Robinhood's shares fell 10% after missing earnings estimates, highlighting a divergence in market reactions towards tech stocks.
- Economic Data Release: The ADP Employment Change and GDP Advance Estimate will be released before the market opens, with investors keenly observing these figures for their potential impact on Federal Reserve policy and market sentiment.
See More
WESTERN DIGITAL RISES 9%, MICRON INCREASES 3%, SANDISK GROWS 4.9%
Western Digital Performance: Western Digital's stock has increased by 9%.
Micron Technology Growth: Micron's stock has risen by 3%.
Sandisk Market Movement: Sandisk's stock has seen a growth of 4.9%.
Overall Market Trends: The increases in these companies indicate positive trends in the tech sector.
See More
Seagate Technology's Earnings Growth Outlook is Optimistic
- Strong Market Demand: In Q2 of fiscal 2026, data center customers accounted for 87% of Seagate Technology's shipments, indicating robust demand for high-capacity hard disk drives (HDDs) and solid-state drives (SSDs), which is expected to persist into 2026 and beyond, providing sustained revenue growth for the company.
- Upward Earnings Guidance: Seagate's non-GAAP earnings per share jumped 53% year-over-year to $3.11 in Q2 of fiscal 2026, with guidance for fiscal 2026 set at $3.40, indicating a remarkable 79% increase, which highlights the company's strengthening profitability.
- Price Increases Driving Profits: The shortage of HDDs led to a 60% price increase for high-capacity storage drives between November 2025 and February 2026, positioning Seagate favorably in negotiations with customers, and suggesting that its earnings growth may exceed analysts' expectations of 58% for fiscal 2027.
- Investment Value Realization: With a current P/E ratio of 33, below the tech sector's 43, and considering its earnings growth rate significantly outpaces the market, Seagate's stock price could rise by 50% by the end of 2026, potentially turning a $1,000 investment into $1,500.
See More
Seagate Technology Shares Surge 17% on Strong Q3 Results and Upbeat Outlook
- Significant Earnings Growth: Seagate Technology reported strong third-quarter results, with shares soaring approximately 17% in premarket trading, primarily driven by surging demand in cloud computing and AI, leading to an increased annual revenue growth target from low to mid-teens to at least 20% over the next few years.
- Sustained Investment from Cloud Customers: The company achieved its tenth consecutive quarter of revenue growth from cloud customers, with the Remaining Performance Obligations (RPO) of cloud service providers nearly doubling to a staggering $1.1 trillion, indicating robust future growth potential.
- Strategic Contract Finalization: Seagate has secured Exabyte-scale supply agreements with nearly all major cloud and hyperscale customers, with nearline capacity almost fully allocated through 2027, and is finalizing build-to-order contracts that ensure revenue stability moving forward.
- Strong Market Demand: The growing need for inference-based applications has led to increased interest from sovereign and neo cloud data centers for Seagate's enterprise nearline drives and system solutions, enhancing the company's competitive position in the market.
See More
Seagate Technology Shares Surge Amid Earnings Recovery
- Earnings Beat: Seagate Technology reported adjusted earnings of $4.10 per share and revenue of $3.11 billion for the fiscal third quarter ending April 3, marking a substantial 44% year-over-year increase, which has significantly fueled the stock's rally.
- Demand Recovery: The company highlighted a resurgence in mass-capacity storage demand, particularly from cloud and hyperscale customers, with nearline HDD shipments and exabyte growth improving as clients resumed spending post-inventory correction, laying a solid foundation for future growth.
- Price and Margin Improvement: Tight supply and disciplined production have bolstered Seagate's pricing power, while a shift towards higher-capacity drives has lifted gross margins to 47% and operating margins to 37.5%, showcasing the company's effective cost control measures.
- Strong Momentum: Seagate's stock has surged from approximately $63 to around $659 over the past year, with a recent 17.7% increase, reflecting robust market momentum and earnings growth expectations, as the company aims for a minimum annual revenue growth target of 20%.
See More
Tech Earnings Reports Drive Market Gains
- Seagate's Strong Performance: Seagate Technology reported a Q4 adjusted EPS forecast of $4.80 to $5.20 and revenue of $3.35B to $3.55B, significantly exceeding Wall Street expectations, which drove shares up 18%, indicating robust demand and growth potential in the storage market.
- NXP Semiconductor Growth: NXP Semiconductors reported Q1 revenue of $3.18B, a 12% year-over-year increase, and guided for Q2 adjusted EPS of $3.29 to $3.72 and revenue of $3.35B to $3.55B, both surpassing analyst estimates, reflecting strong performance across multiple end markets.
- Bloom Energy Beats Expectations: Bloom Energy achieved a non-GAAP EPS of $0.44 and revenue of $751.1M in Q1, up 130.4% year-over-year, and raised its FY2026 revenue outlook to $3.4B to $3.8B, showcasing strong product demand and market confidence.
- Starbucks Sustained Growth: Starbucks reported a 6.2% increase in global comparable sales for Q2, with revenue rising 9% to $9.5B and adjusted EPS of $0.50 beating expectations, while anticipating global and U.S. comparable sales growth of over 5%, demonstrating its ongoing competitiveness in the market.
See More
Federal Reserve Decision and Big Tech Earnings in Focus
- Fed Decision Impact: Investors are closely watching the Federal Reserve's rate decision, which is expected to significantly influence market sentiment, particularly ahead of major tech earnings reports, potentially leading to stock market volatility.
- Big Tech Earnings: Major tech companies including Microsoft, Alphabet, Meta, and Amazon are set to report earnings, with the market anticipating that substantial investments in artificial intelligence will translate into real revenue growth, thereby impacting overall market performance.
- Stock Movements: Seagate's shares surged 20% due to a strong outlook for AI storage demand, while Robinhood's shares fell 10% after missing earnings estimates, highlighting a divergence in market reactions towards tech stocks.
- Economic Data Release: The ADP Employment Change and GDP Advance Estimate will be released before the market opens, with investors keenly observing these figures for their potential impact on Federal Reserve policy and market sentiment.
See More
WESTERN DIGITAL RISES 9%, MICRON INCREASES 3%, SANDISK GROWS 4.9%
Western Digital Performance: Western Digital's stock has increased by 9%.
Micron Technology Growth: Micron's stock has risen by 3%.
Sandisk Market Movement: Sandisk's stock has seen a growth of 4.9%.
Overall Market Trends: The increases in these companies indicate positive trends in the tech sector.
See More
