Seagate Technology (NASDAQ: STX) shares climbed on Friday following an upgrade from Wells Fargo, which shifted its rating on the data storage firm from Equal Weight to Overweight. The move reflects heightened optimism around the company's earnings trajectory and sustained demand for hard-disk drives (HDDs) fueled by artificial intelligence infrastructure investments.
Wells Fargo analyst Aaron Rakers raised the price target on Seagate to $1,100 from $900, projecting that the stock's recent pullback presents an attractive entry point. Rakers noted increasing confidence in Seagate's path to earnings per share exceeding $50, alongside significant capital return potential. The analyst also lifted his price target on Western Digital (NYSE: WDC) to $730 from $575, maintaining an Overweight rating.
Seagate's stock had retreated in recent weeks amid broader concerns about the sustainability of AI-related spending, despite the shares still trading more than 500% higher over the past 12 months. Rival Western Digital, which has similarly benefited from the AI infrastructure boom, has gained nearly 800% in the same period.
AI Infrastructure Bolsters Storage Demand
During its latest earnings call, Seagate highlighted that the top three global cloud service providers have nearly doubled their Remaining Performance Obligations (RPO) to a record $1.1 trillion. This metric reflects growing long-term commitments for cloud and AI infrastructure, which Seagate expects to support demand for its high-capacity storage products.
The company also reported strong momentum for its Mozaic platform and Heat-Assisted Magnetic Recording (HAMR) technology. Seagate's 3TB-per-disk HAMR drives began shipping to its first cloud service provider in 2025. According to management, AI applications are driving higher data creation, longer retention requirements, and greater reliance on historical datasets, boosting demand for cost- and energy-efficient HDDs.
Seagate's strategy centers on durable storage demand, a robust technology roadmap, and disciplined execution. The company raised its annual revenue growth outlook to at least 20%. Nearline storage products now account for roughly 90% of exabyte shipments, with production capacity largely allocated through 2027 under long-term supply agreements, build-to-order contracts, and value-based pricing arrangements.
Western Digital and Micron Also Ride AI Wave
Western Digital continues to expand its Platforms business, targeting enterprise and mid-scale cloud customers while increasing adoption of its UltraSMR technology. Three of its largest customers have already adopted UltraSMR, and management expects all major customers to qualify the technology by the end of calendar 2027.
Micron Technology is also strengthening customer commitments through long-term supply agreements across data center, consumer, and automotive markets. The memory-chip maker has signed 16 strategic customer agreements covering roughly 20% of DRAM volumes and one-third of NAND volumes during the contract period. Fourteen of those agreements represent approximately $100 billion in cumulative minimum contract revenue and include projected customer deposits and financial commitments totaling $22 billion, including about $18 billion in cash deposits.
For broader context on AI infrastructure trends, see Cloudflare Shares Surge 7% on Scotiabank Upgrade Citing AI Infrastructure Growth and TeraWulf Stock Jumps 17% on $19B Anthropic AI Data Center Lease Deal.
Wells Fargo's upgrade underscores the growing conviction that AI-driven demand for storage will persist, even as market participants debate the longevity of capital expenditure cycles. Seagate's emphasis on long-term purchase agreements and its technology leadership in HDDs position it to capitalize on this trend, according to the analyst.
This article is for informational purposes only and does not constitute financial advice.
