Seagate Technology shares climbed approximately 3% in Wednesday trading after the data storage company delivered fiscal fourth-quarter results that surpassed analyst expectations and provided an optimistic outlook for the coming period. The stock rebounded from an 8.5% decline in the prior session.
For the quarter ended in June, Seagate reported adjusted earnings of $5.71 per share, more than double the $2.59 recorded a year earlier and above the consensus estimate of $5.10, according to FactSet. Revenue surged 49% year over year to $3.6 billion, exceeding the $3.5 billion analysts had projected.
Looking ahead to the fiscal first quarter of 2027, the company forecast adjusted earnings of $7.30 per share, well ahead of Wall Street's $5.85 estimate. Revenue is expected to reach $4.1 billion, compared with the $3.8 billion consensus. CEO Dave Mosley attributed the strong outlook to artificial intelligence, stating, “As AI accelerates data generation and its value, we see durable long-term demand for mass capacity storage.”
The robust results prompted several Wall Street firms to raise their price targets on Seagate, citing stronger pricing power, improving profitability, and sustained demand for AI-related storage infrastructure. Bernstein SocGen increased its target to $1,350 from $1,000, maintaining an Outperform rating, and noted that quarterly earnings exceeded expectations due to accelerating price increases and cost reductions from heat-assisted magnetic recording (HAMR) technology. The firm highlighted that price per exabyte continued to rise at a faster pace, driven by improved pricing and lower production costs enabled by HAMR.
Rosenblatt reaffirmed its Buy rating and lifted its target to $1,400 from $1,300, describing the results as a “clean beat-and-raise.” The brokerage noted that management's comments suggest the hard disk drive industry has entered a “new pricing regime,” supported by widening supply-demand imbalances and expectations for sequential improvements in revenue, margins, and profitability throughout fiscal 2027. Citi raised its target to $1,300 while maintaining a Buy rating, citing growing adoption of HAMR technology. Wells Fargo increased its target to $1,180 and reiterated its Overweight rating, saying the results reinforced expectations that nearline storage demand can continue expanding at the upper end of the 25% to 30% annual growth range.
Morningstar said Seagate's latest results strengthen its view that the company is entering a multi-year period of higher-margin, more predictable growth driven by artificial intelligence. According to the research firm, Seagate's nearline storage capacity is fully committed through 2026, largely allocated for 2027, while discussions for 2028 are already underway, providing unusually strong revenue visibility. Morningstar noted that AI infrastructure spending is reshaping the traditionally cyclical hard disk drive market by supporting steadier demand and greater pricing discipline.
The firm expects Seagate to benefit from AI-driven demand, higher-capacity HAMR drives, disciplined industry supply, and improving data center demand. It also anticipates that these trends will support mid-single-digit annual price increases through the end of the decade and contribute to structurally higher margins compared with previous hard disk drive cycles. Despite a 23% decline in July, Seagate shares have gained nearly 404% over the past 12 months.
For context, other companies are also benefiting from AI-driven demand. For instance, Bloom Energy hit $1 billion in quarterly revenue and saw its stock jump 10% on AI data center demand. Meanwhile, Micron has defied a selloff in SK Hynix as investors bet on AI memory demand, and SoFi stock dropped 9% despite an earnings beat and raised guidance.
This article is for informational purposes only and does not constitute financial advice.
