It has been about a month since the last earnings report for Seagate (STX). Shares have added about 10.7% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Seagate due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Seagate's Q4 Earnings Beat Estimates
Seagate reported fourth-quarter fiscal 2026 non-GAAP earnings of $5.71 per share, beating the Zacks Consensus Estimate of $5.10 and exceeding the high end of management’s guidance of $5 per share (+/- 20 cents). The bottom line also expanded a whopping 121% year over year.
Non-GAAP revenues of $3.6 billion surpassed the Zacks Consensus Estimate by 3.9%. Revenues were above the midpoint of guidance, increasing 48% year over year. Robust cloud spending and disciplined operational execution boosted the company's performance. Strong AI-driven demand for cloud storage solutions helped Seagate achieve 34% revenue growth in fiscal 2026 to $12.2 billion. With improving demand visibility, the company expects fiscal 2027 revenue growth to outpace that of fiscal 2026.
Strong enterprise OEM demand led to double-digit revenue and exabyte shipment growth in the June quarter. Seagate is expanding HAMR production to meet growing cloud and enterprise storage needs. It shipped 218 exabytes, up 34% year over year, with data centers accounting for 89% of total shipments. Data center exabyte shipments increased 43% year over year and 11% sequentially. Global cloud customers constitute the majority of Seagate's data center revenue and exabyte demand.
The company is expanding production of HAMR-based drives, initially targeting cloud customers before broadening adoption across enterprise markets. It is investing in manufacturing capacity and technology to support the transition while maintaining stable output as demand shifts to higher-capacity drives. These efforts are expected to support mid-20% annual nearline exabyte growth over the next few years.
Revenues by End Market
Beginning first-quarter fiscal 2026, it reports revenues across two key markets — Data Center, encompassing nearline products and systems sold to cloud, enterprise and VIA customers, and Edge IoT, covering consumer and client-focused segments, including network-attached storage.
The data center accounted for 81% of total revenues, at $2.9 billion, representing a 17% sequential increase and 57% year-over-year growth.
The edge IoT accounted for the remaining 19% of revenues, at $697 million, up 20% year over year and 14% sequentially, aided by ongoing supply constraints and favorable NAND pricing.
Margin Details
Non-GAAP gross profit surged to $1.9 billion, more than doubling year over year and 31% sequentially. Non-GAAP gross margin reached a record 52.7%, rising about 570 basis points (bps) quarter over quarter and roughly 1,480 bps year over year. The gains were driven by disciplined pricing and a favorable product mix, with management expecting these trends to continue amid robust demand.
Non-GAAP operating expenses were $293 million, up 2% year over year.
Non-GAAP operating profit climbed 39% sequentially to $1.6 billion, with a 44.6% operating margin, highlighting strong execution in pricing, supply management and areal density innovation.
Non-GAAP adjusted EBITDA totaled $1.7 billion, up 37% quarter over quarter and 142% year over year.
Balance Sheet and Cash Flow
As of July 3, 2026, cash and cash equivalents were $1.7 billion compared with $1.2 billion as of April 3.
Long-term debt (including the current portion) was $3.6 billion as of July 3, 2026, compared with $3.9 billion as of April 3.
Cash flow from operations during the fiscal fourth quarter was $1.3 billion compared with $1.1 billion in the previous quarter. Free cash flow increased 17% sequentially and 163% year over year to $1.1 billion. Seagate expects further cash flow growth in fiscal 2027, supported by strong demand, operational efficiency and disciplined capital spending.
June-quarter capital spending totaled $187 million, bringing fiscal 2026 CapEx to 4.7% of revenue, within its target range of 4-6% of revenue. Seagate continues balancing investment with shareholder returns. The company returned approximately $810 million during fiscal 2026 through quarterly dividends and share repurchases. Additionally, Seagate declared another quarterly dividend of 74 cents per share, payable on Oct. 7, 2026, to shareholders of record on Sept. 24.
Fiscal Q1 2027 Guidance Points at Continued Momentum
Seagate's BTO model points to sustained demand for high-capacity nearline drives amid rising AI adoption. The company expects continued revenue and margin growth in the September quarter, backed by the Mozaic rollout and disciplined pricing. Management anticipates fiscal first-quarter revenues of $4.1 billion (+/- $100 million). At the midpoint, this indicates a 56% year-over-year improvement.
Non-GAAP earnings are expected to be $7.3 per share (+/- 20 cents).
For the quarter, non-GAAP operating expenses are expected to be around $300 million. At the midpoint of revenue guidance, non-GAAP operating margin is projected to be roughly 50%.
The guidance incorporates expected dilution from Exchangeable Senior Notes due 2028, minimal anticipated impact from tariffs and minimal expected impact from current Middle East geopolitical conflicts. This outlook suggests that management expects cloud spending and AI-driven storage demand to remain healthy.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in fresh estimates.
The consensus estimate has shifted 30.61% due to these changes.
VGM Scores
At this time, Seagate has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock has a score of F on the value side, putting it in the lowest quintile for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Seagate has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Seagate belongs to the Zacks Computer - Integrated Systems industry. Another stock from the same industry, IBM (IBM), has gained 1.5% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.
IBM reported revenues of $17.16 billion in the last reported quarter, representing a year-over-year change of +1.1%. EPS of $2.93 for the same period compares with $2.80 a year ago.
For the current quarter, IBM is expected to post earnings of $2.90 per share, indicating a change of +9.4% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
IBM has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>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
International Business Machines Corporation (IBM): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).