Data storage company Seagate Technology Holdings plc (STX) recently reported its third-quarter results for fiscal 2026, which raised expectations for the company, especially amid surging demand for storage solutions. In particular, demand for hard disk drives (HDDs) has been surging due to their use in agentic AI. In fact, Seagate pointed out that, as agentic AI requires continuous access to large data volumes, HDDs are increasingly in demand.
Morgan Stanley analyst Erik Woodring stated that for the third quarter in a row, his prior bull case for Seagate has become the base case, as the company continues to report stronger-than-expected results. Discussions have also included Seagate benefiting from skyrocketing token growth and emerging AI apps.
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Moreover, as a duopoly has emerged between Seagate and Western Digital Corporation (WDC), supply is expected to remain “strict,” while HDDs make up about 80% of cloud storage demand.
Therefore, should you consider buying Seagate’s stock?
About Seagate Stock
Headquartered in Singapore, Seagate Technology is a leading provider of data storage solutions. The company designs, develops, and manufactures HDDs, solid-state drives (SSDs), and related storage technologies that power data centers, personal computing, and enterprise systems worldwide.
Its operations span research and development, precision manufacturing, and global supply chain management to deliver reliable, high-capacity storage for cloud services, AI infrastructure, and consumer devices. Seagate focuses on innovation in mass-capacity storage to meet the explosive growth in data creation and management. The company has a market capitalization of $140.29 billion.
Seagate’s stock surged dramatically over the past year due to explosive demand for its high-capacity HDDs in AI data centers and cloud infrastructure. Hyperscalers, including major cloud providers, are ramping up investments in AI training and operations, requiring massive, cost-effective storage solutions, where Seagate excels with technologies like Mozaic HAMR drives.
Over the past 52 weeks, the stock has gained 640%, while it has been up 144.6% year-to-date (YTD). It reached a 52-week high of $697 on April 29, but is down 3.35% from that level.
www.barchart.com On a forward-adjusted basis, Seagate’s price-to-earnings (non-GAAP) ratio of 43.23 times is higher than the industry average of 23.10 times.
Seagate Crushed Q3 Expectations as AI Storage Demand Fuels Record Margins
On April 29, Seagate announced the third-quarter results for fiscal 2026 (quarter ended April 3). The company reported $3.11 billion in revenue for the quarter, up 44.1% year-over-year (YOY). The figure was also higher than the $2.94 billion that Wall Street analysts had expected.
Seagate is facing higher structural demand from AI applications, which have amplified data creation and storage needs. To address this high demand, the company employs an areal density-driven product strategy, enabling it to deliver storage at scale.
Based on this strong top line performance, Seagate reached a record margin. The company’s non-GAAP operating margin grew from 23.5% in Q3 FY2025 to 37.5% in Q3 FY2026. Its non-GAAP EPS grew 115.8% YOY to $4.10, surpassing the $3.50 that analysts had expected. Seagate generated $1.10 billion in cash flow from operations.
Wall Street analysts also expect Seagate’s bottom line to grow robustly. For the current fiscal year, profit is expected to increase by 68.9% annually to $12.26 per diluted share, followed by a 56.5% growth to $19.19 in the next fiscal year.
What Do Analysts Think About Seagate Stock?
After Seagate’s Q3 earnings report, there have been multiple ratings reaffirmations and price target raises from Wall Street analysts. Analysts at Rosenblatt maintained a “Buy” rating on Seagate’s stock and doubled the price target from $500 to $1,000.
This raised price target implies a 48.5% upside from current levels. Rosenblatt analysts cited the company’s management’s strategy to deploy its HAMR technology to increase capacity per drive. This strategy is also expected to have an incremental effect on margins while delivering a lower cost per bit.
Similarly, Citi analyst Asiya Merchant raised the price target from $595 to $740 while maintaining a bullish “Buy” rating, based on the company’s “strong beat and raise” quarter and stronger-than-expected demand.
Following the blockbuster earnings report, analysts at Cantor Fitzgerald also raised the stock’s price target from $650 to $1,000, while maintaining an “Overweight” rating, suggesting higher upside.
Seagate is receiving a lot of praise on Wall Street, with analysts awarding the stock an overall “Strong Buy” rating. Of the 25 analysts rating the stock, 20 have rated it a “Strong Buy,” one a “Moderate Buy,” and four a “Hold.”
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www.barchart.com Key Takeaways
Post the blockbuster quarterly earnings, Seagate’s stock gained 11.1% intraday on April 29, indicating that the company is reaping the benefits of strong demand. Analysts are also flashing bullish signs, while the company has posited an upbeat outlook. Therefore, with Seagate firing on all cylinders, its stock might be a solid “Buy” now.
On the date of publication, Anushka Dutta 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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