Seagate Technology (STX) will report fourth-quarter fiscal 2026 earnings on July 28, and the results could lead to a rebound in STX stock. Notably, Seagate stock has dropped about 20% from its 52-week high after investors locked in profits following a massive rally and concerns that hyperscale cloud providers may be over-investing in data centers, potentially leading to slower infrastructure spending.
While those concerns have weighed on sentiment, the recent pullback presents an attractive buying opportunity. The long-term fundamentals of the storage industry remain intact, supported by growing demand for high-capacity hard drives used in artificial intelligence (AI) infrastructure, cloud computing, and enterprise data storage. Meanwhile, tight industry supply has improved pricing, allowing Seagate to expand both revenue and margins.
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These favorable trends are expected to continue into fiscal 2027. As a result, Seagate's upcoming earnings report could showcase another quarter of strong growth. At the same time, management's outlook may reassure investors that demand remains resilient despite concerns about a potential slowdown in data-center spending.
www.barchart.com Seagate to Deliver Strong Q4 Earnings
Seagate appears well-positioned to deliver another strong quarter, supported by robust demand for high-capacity storage solutions, improving pricing, and continued margin expansion.
In Q3, Seagate generated $3.1 billion in revenue, with the data-center business generating most of its sales. Revenue from the data-center segment surged 55% year-over-year (YOY) to $2.5 billion, reflecting strong demand from hyperscale cloud and enterprise customers.
Profitability improved even faster than revenue. Adjusted gross profit increased to $1.5 billion, while adjusted gross margin expanded to 47%, up from 42.2% in the previous quarter. Higher pricing and an improved mix of high-capacity drives were the primary drivers behind this improvement.
These favorable trends are expected to be reflected in the Q4 report. Strong demand and pricing are likely to support revenue and earnings. Seagate is also strengthening its competitive position through its Mozaic platform and Heat-Assisted Magnetic Recording (HAMR) technology. These innovations significantly increase storage density while improving efficiency, allowing customers to store more data at a lower total cost. As adoption expands, these technologies could support both sustained revenue growth and additional margin expansion.
Management expects Q4 revenue of approximately $3.45 billion at the midpoint of its guidance, representing 41% YOY growth and continued sequential improvement. The company's build-to-order (BTO) manufacturing model further enhances earnings quality by improving visibility into customer demand while helping maintain pricing discipline and supply balance.
Seagate also expects adjusted gross margin to improve further, driven by higher revenue and favorable pricing. Adjusted EPS is projected to reach about $5, nearly doubling from $2.59 in the same quarter last year. Wall Street currently expects earnings of approximately $4.89 per share, suggesting the company could outperform consensus by a wide margin.
Overall, Seagate continues to benefit from AI-driven data growth, rising demand for mass-capacity storage, improving pricing, and disciplined execution. These factors position the company for continued revenue and earnings growth, which will likely lead to a sharp rebound in STX stock.
Seagate Stock Trades Cheap Ahead of Q4 Earnings
While Seagate is expected to sustain its solid growth momentum in Q4 and beyond, the pullback in STX stock has driven its valuation lower. Seagate’s forward price-to-earnings (P/E) ratio of 33 times appears compelling given the company’s solid earnings growth trajectory.
Wall Street expects Seagate's EPS to climb nearly 90% to $26.84 in fiscal 2027, reflecting sustained demand for high-capacity storage drives and a favorable pricing environment. If the company delivers another strong quarter and offers upbeat guidance, analysts could raise their earnings estimates even further after the Q4 report.
Seagate's improving fundamentals, industry tailwinds, and expanding earnings power make the current valuation look compelling for long-term investors.
Final Takeaway
With revenue growth, margin expansion, and earnings momentum remaining strong, the upcoming July 28 earnings report could lead to a rebound in Seagate stock. The company is also making steady progress in strengthening its balance sheet. Net leverage declined to 0.7 times in the March quarter, reflecting its focus on reducing debt.
With its improving fundamentals, healthier balance sheet, and a compelling valuation, Seagate's risk-reward profile looks attractive. As a result, STX stock appears to be a compelling buy ahead of the Q4 release. Wall Street analysts share this optimism, with the stock carrying a consensus “Strong Buy” rating.
www.barchart.com On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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