Seagate Technology Shares Surge Amid Earnings Recovery
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 5 days ago
0mins
Should l Buy STX?
Source: seekingalpha
- 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%.
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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: 726.930
Low
150.00
Averages
310.39
High
465.00
Current: 726.930
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 Reports Strong Earnings, Stock Surges
- Earnings Beat: Seagate Technology's Q2 fiscal 2026 results revealed an adjusted profit of $4.10 per share on $3.11 billion in revenue, with sales soaring 44% year-over-year, significantly surpassing Wall Street expectations and showcasing the company's robust market performance.
- Stock Surge: Following the positive earnings report, Seagate's stock price surged 24% over the past week, reflecting strong investor confidence in the company's future growth potential, with a market cap now at $159 billion.
- Optimistic Outlook: The company’s guidance for the upcoming quarter suggests revenue of approximately $3.45 billion and adjusted earnings per share around $5, both exceeding analyst expectations, indicating sustained strong demand driven by artificial intelligence-related storage needs.
- Positive Market Reaction: Seagate's impressive performance and optimistic outlook not only bolster investor confidence but may also attract more institutional investors, further driving stock price increases and enhancing the company's market position.
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Data Center Spending Bubble Talk Disproven This Quarter
- Capital Expenditure Overview: Alphabet, the parent company of Google, estimates its data center spending for 2023 to be between $180 billion and $190 billion, with its stock price rising from $349 to $385, reflecting a 12% weekly gain that indicates strong market confidence in its cloud business growth.
- Amazon Cloud Services Growth: Amazon anticipates $200 billion in spending, with its stock price increasing from $260 to $268, a weekly gain of 1.6%, as its AWS business achieves a quarterly revenue of $37.6 billion, growing at 28%, marking the fastest growth in 15 quarters.
- Apple's Low Spending Strategy: Apple has allocated only $13 billion for data centers, with its stock price rising from $271 to $280, a weekly gain of 3.4%, and despite relying on Google's Gemini service, it maintains high margins due to its global installed base of 2.5 billion devices.
- Challenges for Microsoft and Meta: Microsoft expects to spend $190 billion, with its stock price declining from $429 to $414, a weekly loss of 2.4%, as Azure grows at 40% but lacks market confidence; Meta plans to increase spending by $10 billion, with its stock price dropping from $670 to $605, a 9.8% weekly loss, facing significant uncertainty.
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U.S. Stocks Close: S&P 500 Hits All-Time High
- S&P 500 Strong Performance: The S&P 500 index rose by 0.29%, reaching an all-time high, driven by Apple's forecast of stronger-than-expected Q2 revenue, which boosted market sentiment and indicated increased investor confidence in tech stocks.
- Atlassian Stock Surge: Atlassian's stock soared over 29% after reporting Q3 revenue of $1.79 billion, exceeding the market expectation of $1.69 billion, highlighting a robust recovery in the software sector that may attract more investor interest.
- Oil Price Volatility Impacting Markets: WTI crude oil prices fell more than 3%, easing inflation concerns, although trade tensions resurfaced with President Trump's threat to raise tariffs on EU auto imports, potentially negatively affecting market sentiment.
- Economic Data Influencing Stocks: The April ISM manufacturing index remained unchanged at 52.7, below the expected 53.2, indicating signs of economic slowdown, despite the majority of companies reporting Q1 earnings that exceeded expectations, leaving the overall market facing uncertainty.
See More
Atlassian and Others See Significant Stock Gains
- Atlassian's Optimistic Guidance: Atlassian shares surged 23% after projecting a 24% revenue growth for the year, exceeding its previous 22% forecast and the FactSet consensus of 22.2%, indicating strong market performance and growth potential.
- nVent Electric's Strong Earnings: nVent's stock jumped 11% as first-quarter EPS and revenue surpassed Wall Street's highest estimates, with full-year revenue growth forecasted at 26% to 28%, significantly above the consensus of 18%, reflecting robust demand in data centers and energy storage.
- Cboe Global Markets Layoffs: Cboe shares rose 9% following the announcement of a 20% workforce reduction, with first-quarter adjusted EPS at $3.70 and revenue of $728.9 million, both exceeding market expectations, demonstrating the company's commitment to operational optimization.
- Roku's Revenue Beat: Roku's stock increased by 4% after reporting first-quarter revenue of $1.25 billion, surpassing the expected $1.20 billion, with adjusted EBITDA also exceeding estimates, showcasing the company's ongoing growth potential in the streaming market.
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Memory Chip Shortage Drives Rising Capital Expenditures
- Surging Memory Demand: Samsung's EVP Jaejune Kim stated that the surge in memory demand is prompting customers to pre-order chips for 2027, indicating that the supply-demand gap is expected to widen further, highlighting an increasingly tight market in the coming years.
- Rising Capital Expenditures: Alphabet reported a capital expenditure of $35.7 billion in Q1, primarily aimed at supporting AI opportunities, reflecting the urgency of investing in technical infrastructure, with projections indicating capex could exceed $1 trillion by next year.
- Growing Hardware Demand: Meta Platforms is extending the lifespan of aging servers due to an inability to acquire new ones, with an internal memo noting that hardware demand growth has exceeded expectations, particularly in critical server commodities like DRAM and HDDs, which are becoming binding constraints.
- Emerging Investment Opportunities: With strong earnings from major tech firms, Wall Street analysts believe investors will continue to chase perceived winners in the semiconductor and memory sectors, especially against the backdrop of rising prices for DRAM and NAND products, while demand for memory testing equipment is also on the rise.
See More
Sandisk Reports Tripled Revenue in Q3 Earnings
- Significant Revenue Growth: Sandisk's Q3 fiscal 2026 revenue surged over 300% year-over-year to $5.95 billion, significantly exceeding analyst expectations of $4.73 billion, highlighting the company's robust performance in the storage market.
- Profitability Turnaround: The company reported a non-GAAP profit of nearly $3.68 billion ($23.41 per share), a remarkable recovery from a loss of $43 million in the previous year, indicating a substantial improvement in profitability.
- Strong Segment Performance: Revenue from the data center segment skyrocketed 645% year-over-year to nearly $1.47 billion, while edge computing contributed $3.66 billion with a 295% increase, and consumer revenue grew 44% to $820 million, showcasing strong demand across all segments.
- Optimistic Guidance: Sandisk provided a revenue outlook for the current fourth quarter of $7.75 billion to $8.25 billion, with adjusted net income expectations of $30 to $33 per share, both well above market averages, reflecting the company's confidence in future growth.
See More
Seagate Technology Reports Strong Earnings, Stock Surges
- Earnings Beat: Seagate Technology's Q2 fiscal 2026 results revealed an adjusted profit of $4.10 per share on $3.11 billion in revenue, with sales soaring 44% year-over-year, significantly surpassing Wall Street expectations and showcasing the company's robust market performance.
- Stock Surge: Following the positive earnings report, Seagate's stock price surged 24% over the past week, reflecting strong investor confidence in the company's future growth potential, with a market cap now at $159 billion.
- Optimistic Outlook: The company’s guidance for the upcoming quarter suggests revenue of approximately $3.45 billion and adjusted earnings per share around $5, both exceeding analyst expectations, indicating sustained strong demand driven by artificial intelligence-related storage needs.
- Positive Market Reaction: Seagate's impressive performance and optimistic outlook not only bolster investor confidence but may also attract more institutional investors, further driving stock price increases and enhancing the company's market position.
See More
Data Center Spending Bubble Talk Disproven This Quarter
- Capital Expenditure Overview: Alphabet, the parent company of Google, estimates its data center spending for 2023 to be between $180 billion and $190 billion, with its stock price rising from $349 to $385, reflecting a 12% weekly gain that indicates strong market confidence in its cloud business growth.
- Amazon Cloud Services Growth: Amazon anticipates $200 billion in spending, with its stock price increasing from $260 to $268, a weekly gain of 1.6%, as its AWS business achieves a quarterly revenue of $37.6 billion, growing at 28%, marking the fastest growth in 15 quarters.
- Apple's Low Spending Strategy: Apple has allocated only $13 billion for data centers, with its stock price rising from $271 to $280, a weekly gain of 3.4%, and despite relying on Google's Gemini service, it maintains high margins due to its global installed base of 2.5 billion devices.
- Challenges for Microsoft and Meta: Microsoft expects to spend $190 billion, with its stock price declining from $429 to $414, a weekly loss of 2.4%, as Azure grows at 40% but lacks market confidence; Meta plans to increase spending by $10 billion, with its stock price dropping from $670 to $605, a 9.8% weekly loss, facing significant uncertainty.
See More
U.S. Stocks Close: S&P 500 Hits All-Time High
- S&P 500 Strong Performance: The S&P 500 index rose by 0.29%, reaching an all-time high, driven by Apple's forecast of stronger-than-expected Q2 revenue, which boosted market sentiment and indicated increased investor confidence in tech stocks.
- Atlassian Stock Surge: Atlassian's stock soared over 29% after reporting Q3 revenue of $1.79 billion, exceeding the market expectation of $1.69 billion, highlighting a robust recovery in the software sector that may attract more investor interest.
- Oil Price Volatility Impacting Markets: WTI crude oil prices fell more than 3%, easing inflation concerns, although trade tensions resurfaced with President Trump's threat to raise tariffs on EU auto imports, potentially negatively affecting market sentiment.
- Economic Data Influencing Stocks: The April ISM manufacturing index remained unchanged at 52.7, below the expected 53.2, indicating signs of economic slowdown, despite the majority of companies reporting Q1 earnings that exceeded expectations, leaving the overall market facing uncertainty.
See More
Atlassian and Others See Significant Stock Gains
- Atlassian's Optimistic Guidance: Atlassian shares surged 23% after projecting a 24% revenue growth for the year, exceeding its previous 22% forecast and the FactSet consensus of 22.2%, indicating strong market performance and growth potential.
- nVent Electric's Strong Earnings: nVent's stock jumped 11% as first-quarter EPS and revenue surpassed Wall Street's highest estimates, with full-year revenue growth forecasted at 26% to 28%, significantly above the consensus of 18%, reflecting robust demand in data centers and energy storage.
- Cboe Global Markets Layoffs: Cboe shares rose 9% following the announcement of a 20% workforce reduction, with first-quarter adjusted EPS at $3.70 and revenue of $728.9 million, both exceeding market expectations, demonstrating the company's commitment to operational optimization.
- Roku's Revenue Beat: Roku's stock increased by 4% after reporting first-quarter revenue of $1.25 billion, surpassing the expected $1.20 billion, with adjusted EBITDA also exceeding estimates, showcasing the company's ongoing growth potential in the streaming market.
See More
Memory Chip Shortage Drives Rising Capital Expenditures
- Surging Memory Demand: Samsung's EVP Jaejune Kim stated that the surge in memory demand is prompting customers to pre-order chips for 2027, indicating that the supply-demand gap is expected to widen further, highlighting an increasingly tight market in the coming years.
- Rising Capital Expenditures: Alphabet reported a capital expenditure of $35.7 billion in Q1, primarily aimed at supporting AI opportunities, reflecting the urgency of investing in technical infrastructure, with projections indicating capex could exceed $1 trillion by next year.
- Growing Hardware Demand: Meta Platforms is extending the lifespan of aging servers due to an inability to acquire new ones, with an internal memo noting that hardware demand growth has exceeded expectations, particularly in critical server commodities like DRAM and HDDs, which are becoming binding constraints.
- Emerging Investment Opportunities: With strong earnings from major tech firms, Wall Street analysts believe investors will continue to chase perceived winners in the semiconductor and memory sectors, especially against the backdrop of rising prices for DRAM and NAND products, while demand for memory testing equipment is also on the rise.
See More
Sandisk Reports Tripled Revenue in Q3 Earnings
- Significant Revenue Growth: Sandisk's Q3 fiscal 2026 revenue surged over 300% year-over-year to $5.95 billion, significantly exceeding analyst expectations of $4.73 billion, highlighting the company's robust performance in the storage market.
- Profitability Turnaround: The company reported a non-GAAP profit of nearly $3.68 billion ($23.41 per share), a remarkable recovery from a loss of $43 million in the previous year, indicating a substantial improvement in profitability.
- Strong Segment Performance: Revenue from the data center segment skyrocketed 645% year-over-year to nearly $1.47 billion, while edge computing contributed $3.66 billion with a 295% increase, and consumer revenue grew 44% to $820 million, showcasing strong demand across all segments.
- Optimistic Guidance: Sandisk provided a revenue outlook for the current fourth quarter of $7.75 billion to $8.25 billion, with adjusted net income expectations of $30 to $33 per share, both well above market averages, reflecting the company's confidence in future growth.
See More
