Seagate Technology Holdings plc STX is set to report fourth-quarter fiscal 2026 earnings on Wednesday, after the closing bell. In the quarter, the company is likely to have generated higher revenues due to steady growth in high-capacity nearline drive demand across global cloud and hyperscaler customers.
Factors at Play
The exponential growth of AI, cloud infrastructure and hyperscale data centers has reignited demand for high-capacity HDDs. Against this backdrop, investors are closely watching one key metric –HDD exabyte shipments. The company's ability to ship more storage capacity, even if the total number of drives remains relatively flat, is likely to have influenced revenue and margins in the quarter. Higher exabyte shipments indicate strong enterprise and cloud storage demand, increased adoption of high-capacity drives, improved ASPs and better gross margin potential. For Seagate, rising exabyte shipments often translate into stronger financial performance because high-capacity enterprise drives command significantly higher prices than consumer HDDs.
During the quarter, Seagate introduced a lineup of new and updated storage solutions for consumers and professional users under its Seagate, FireCuda and LaCie brands. These include the Seagate One Touch desktop external hard drive, the FireCuda X Vault hard drive and the LaCie 8big Pro5 multi-bay RAID storage system. Moreover, Seagate divested its Lyve Cloud business to Wasabi Technologies. The deal also makes STX a shareholder in the fast-growing cloud storage provider. By selling the business to Wasabi, Seagate enables customers to benefit from a provider focused entirely on cloud storage innovation, while it concentrates on advancing its leadership in mass-capacity storage solutions.
Seagate's key strengths lie in its nearline HDD portfolio. In the last reported quarter, Seagate shipped 199 exabytes of HDD storage, up 39% year over year and 5% sequentially. The data center market accounted for 88% of shipments, driven by sustained demand from cloud and enterprise clients. STX shipped 175 exabytes to data center customers, up 6% sequentially and 47% year over year. Management noted locking in exabyte-scale supply commitments from almost all major cloud and hyperscale customers, leaving nearline capacity nearly fully allocated through 2027.
Seagate Technology Holdings PLC Price and EPS Surprise
Seagate Technology Holdings PLC price-eps-surprise | Seagate Technology Holdings PLC Quote
AI-driven inference workloads are boosting demand for cloud and edge storage, with sovereign and neo-cloud data centers increasingly adopting Seagate's enterprise nearline drives. As AI data volumes grow, HDDs remain essential for delivering scalable, energy-efficient and cost-effective storage. Seagate is well-positioned to benefit through its HAMR-based Mozaic platform. The latest Mozaic 4+ delivers up to 44TB per drive, improving storage density, cost efficiency and scalability while supporting strong data-center exabyte growth. This positions Seagate to capitalize on the AI-driven storage expansion, supporting its targeted mid-20% annual data-center exabyte growth.
Seagate noted that Mozaic 4+ is projected to constitute the majority of its HAMR exabyte shipments exiting calendar 2026. With the development of Mozaic 5 underway, it expects to begin qualification shipments in late calendar 2027.
Overall Expectations
The Zacks Consensus Estimate for nearline HDD exabytes shipment for the June quarter is pegged at 190, indicating an improvement from 137 in the prior-year quarter. The consensus estimate for non-nearline shipment is pinned at 25.8, a slight deterioration from the prior-year quarter’s 26.
The Zacks Consensus Estimate for earnings is pegged at $5.10 per share, indicating a 96.9% year-over-year increase. The Zacks Consensus Estimate for revenues is $3.5 billion, suggesting a 43% uptick from the year-ago actual.
Earnings Whispers
Our proven model predicts an earnings beat for Seagate this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is exactly the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Seagate has an Earnings ESP of +0.47% and a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks to Consider
Here are a few other companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season.
The Allstate Corporation ALL has an Earnings ESP of +2.59% and a Zacks Rank #2 at present. ALL is gearing up for quarterly results on Aug. 5, after market close.
The Zacks Consensus Estimate for Allstate’s second-quarter 2026 earnings is pegged at $5.61 per share, indicating a year-over-year decrease of 5.6%. Its earnings beat estimates in each of the last four reported quarters, delivering an average surprise of 51.1%. The Zacks Consensus Estimate for ALL's revenues is pegged at $17.73 billion, indicating a 5.7% increase from the year-ago reported figure.
Silicon Motion Technology Corporation SIMO has an Earnings ESP of +7.68% and sports a Zacks Rank #1 at present. It is set to release second-quarter 2026 numbers on July 29. The Zacks Consensus Estimate for SIMO’s second-quarter earnings is pegged at $2.13 per share, indicating a year-over-year jump of 208.7%. Its earnings beat estimates in three of the last four reported quarters, while missing once, delivering an average surprise of 18.6%. The Zacks Consensus Estimate for revenues is pegged at $403.6 million, indicating a 103.2% increase from the year-ago reported figure.
The Earnings ESP for Monolithic Power Systems, Inc. MPWR is +1.00%, and it carries a Zacks Rank of #2 at present. The company is slated to report second-quarter 2026 numbers on July 30. The Zacks Consensus Estimate for MPWR’s second-quarter earnings is pegged at $5.88 per share, indicating a year-over-year increase of 39.7%. Its earnings beat estimates in each of the last four reported quarters, delivering an average surprise of 2.5%. The Zacks Consensus Estimate for revenues is pegged at $904 million, indicating a 36% increase from the year-ago reported figure.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Seagate Technology Holdings PLC (STX): Free Stock Analysis Report
The Allstate Corporation (ALL): Free Stock Analysis Report
Monolithic Power Systems, Inc. (MPWR): Free Stock Analysis Report
Silicon Motion Technology Corporation (SIMO): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).