Company Reports

Seagate Technology shattered its own records for gross margin (52.7%) and operating margin (44.6%) in its fiscal fourth quarter and issued first-quarter guidance that suggests the artificial intelligence-driven storage cycle is still accelerating.

Seagate Technology is a leader in hard disk drives. The HDD market has become concentrated, with only three players remaining: Western Digital, Seagate, and Toshiba. Seagate and Western Digital have jostled back and forth for top share over the last decade, while Toshiba remains a distant third. HDDs are being phased out in key end markets in favor of solid-state drives, but we still see a future for HDDs in data centers. The economics (total cost of ownership) still favor HDDs over SSDs for workloads where controlling costs is important while immediate read access is not. This is commonly referred to as nearline storage, which we expect will make up almost all of Seagate’s business over time.

Seagate delivered a stellar third quarter, shattering records for gross margin (47%) and operating margin (37.5%) while providing a fourth-quarter outlook that suggests the growth engine is only accelerating.

Seagate Technology is a leader in hard disk drives. The HDD market has become concentrated, with only three players remaining: Western Digital, Seagate, and Toshiba. Seagate and Western Digital have jostled back and forth for top share over the last decade, while Toshiba remains a distant third. HDDs are being phased out in key end markets in favor of solid-state drives, but we still see a future for HDDs in data centers. The economics (total cost of ownership) still favor HDDs over SSDs for workloads where controlling costs is important while immediate read access is not. This is commonly referred to as “nearline” storage, which we expect will make up almost all of Seagate’s business over time.

Seagate Technology is a leader in hard disk drives. The HDD market has become concentrated, with only three players remaining: Western Digital, Seagate, and Toshiba. Seagate and Western Digital have jostled back and forth for top share over the last decade, while Toshiba remains a distant third. HDDs are being phased out in key end markets in favor of solid-state drives, but we still see a future for HDDs in data centers. The economics (total cost of ownership) still favor HDDs over SSDs for workloads where controlling costs is important while immediate read access is not. This is commonly referred to as “nearline” storage, which we expect will make up almost all of Seagate’s business over time.

Seagate's revenue grew 22% year over year, while gross margins improved another 210 basis points quarter over quarter. We expected Seagate to beat guidance and consensus, and it did.

Incremental pricing clues are all skewing positive for hard disk drive makers Western Digital and Seagate, leading us to raise our earnings per share and fair value estimates.

Seagate Technology is a leader in hard disk drives. The HDD market has become concentrated, with only three players remaining: Western Digital, Seagate, and Toshiba. Seagate and Western Digital have jostled back and forth for top share over the last decade, while Toshiba remains a distant third. HDDs are being phased out in key end markets in favor of solid-state drives, but we still see a future for HDDs in data centers. The economics (total cost of ownership) still favor HDDs over SSDs for workloads where controlling costs is important while immediate read access is not. This is commonly referred to as “nearline” storage, which we expect will make up almost all of Seagate’s business over time.

Seagate's fiscal 2026 first-quarter revenue grew 21% year over year to $2.63 billion, 80% of which were data center sales. Non-GAAP gross margin expanded 680 basis points year over year to 40% and non-GAAP operating margin rose 860 basis points to 29% on rising adoption of higher-density drives.

Seagate Technology is a leader in the hard disk drive market. The HDD market has become concentrated, with only three players remaining: Western Digital, Seagate, and Toshiba. Seagate and Western Digital have jostled back and forth for top share over the last decade, while Toshiba remains a distant third. HDDs are being phased out in key end markets in favor of solid-state drives, but we still see a future for HDDs in data centers. The economics (total cost of ownership) still favor HDDs over SSDs for workloads where controlling costs is important while immediate read access is not. This is commonly referred to as “nearline” storage, which we expect will make up almost all of Seagate’s business over time.

Seagate Technology is a leader in the hard disk drive market. The HDD market has become concentrated, with only three players remaining: Western Digital, Seagate, and Toshiba. Seagate and Western Digital have jostled back and forth for top share over the last decade, while Toshiba remains a distant third. HDDs are being phased out in key end markets in favor of solid-state drives, but we still see a future for HDDs in data centers. The economics (total cost of ownership) still favor HDDs over SSDs for workloads where controlling costs is important while immediate read access is not. This is commonly referred to as “nearline” storage, which we expect will make up almost all of Seagate’s business over time.

Seagate Technology's fiscal fourth-quarter results included year-over-year revenue growth of 30% and gross margin expanding over 200 basis points quarter over quarter as higher-density HAMR—heat-assisted magnetic recording—shipments ramp up.

Seagate Technology plans to ramp its Mozaic 4+ early next year, with qualifications for Mozaic 5+ expected to begin by early 2028. The firm expects a mix shift to heat assisted magnetic recording, or HAMR, drives to accelerate revenue growth and margin expansion.

Seagate is a leader in the hard disk drive, or HDD, market. HDDs have become a concentrated market, with only three players remaining: Western Digital, Seagate, and Toshiba. Seagate and Western Digital have jostled back and forth for top share over the last decade, while Toshiba remains a distant third. HDDs are being phased out in key end markets, in favor of solid-state drives, or SSDs, but we still see a future for HDDs within data centers. The economics (total cost of ownership) still favor HDDs over SSDs for workloads where controlling costs is important while immediate read access is not. This is commonly referred to as “nearline” storage, which we expect will make up almost all of Seagate’s business over time.

Seagate reported solid fiscal third-quarter 2025 earnings, with results largely coming in at the high end of management's previous guidance range. Commentary on tariffs was largely neutral.

Seagate is a leader in the hard disk drive, or HDD, market. HDDs have become a concentrated market, with only three players remaining: Western Digital, Seagate, and Toshiba. Seagate and Western Digital have jostled back and forth for top share over the last decade, while Toshiba remains a distant third. HDDs are being phased out in key end markets, in favor of solid-state drives, or SSDs, but we still see a future for HDDs within data centers. The economics (total cost of ownership) still favor HDDs over SSDs for workloads where controlling costs is still important while immediate read access is less important. This is commonly referred to as “nearline” storage, which we expect will make up almost all of Western’s business over time.

We are transferring our coverage of Seagate after previously transferring coverage of Western Digital following the spinoff of its NAND memory business SanDisk. We are raising our fair value estimate to $85 from $78, largely driven by more positive gross margin assumptions as we become a bit more positive on the benefits of higher structural data storage demand given current artificial intelligence and data center trends, along with a greater belief that the industry could be slightly more disciplined on pricing in the current cycle. With shares trading at $86 as of this writing, we view shares as fairly valued. We retain our no-moat, High Morningstar Uncertainty, and Standard Capital Allocation Ratings for the firm.

Seagate is a leader in the hard disk drive, or HDD, market. HDDs have become a concentrated market, with only three players remaining: Western Digital, Seagate, and Toshiba. Seagate and Western Digital have jostled back and forth for top share over the last decade, while Toshiba remains a distant third. HDDs are being phased out in key end markets, in favor of solid-state drives, or SSDs, but we still see a future for HDDs within data centers. The economics (total cost of ownership) still favor HDDs over SSDs for workloads where controlling costs is still important while immediate read access is less important. This is commonly referred to as “nearline” storage, which we expect will make up almost all of Western’s business over time.

Seagate Technology reported $2.33 billion in December quarter sales, rising 7% sequentially and 50% year over year. Non-GAAP gross margin of 35.5% rose 220 basis points sequentially. March quarter guidance met FactSet consensus expectations with a sales midpoint of $2.1 billion.

Seagate is a leading designer and manufacturer of hard disk drives, or HDDs, used for data storage in consumer and enterprise applications. We think Seagate is successfully transitioning its portfolio to focus on mass-capacity drives for cloud providers and enterprises as consumer applications for legacy HDDs switch to faster flash-based solid-state drives. We expect continued demand for mass-capacity drives over the next five years as enterprises look to capture more data and use a multitier storage approach, implementing both mass-capacity HDDs and smaller enterprise-grade SSDs as complements in data centers. Seagate has consistently driven costs down for its mass-capacity HDDs by advancing to larger capacities, and we think it will continue to do so by leveraging new technologies like heat-assisted magnetic recording.