Seagate's Hard Drives See Massive Demand as AI Storage Boom Extends Capacity Commitments to 2028

AI storage boom is keeping Seagate's hard drives spinning

The AI infrastructure boom isn't just eating all the memory - it's also driving demand for storage, giving high-capacity hard drives a new lease of life, according to Seagate. The storage veteran says cloud operators are buying ever more mass-capacity hardware as AI applications generate and retain growing volumes of data. "Datacenter demand now represents approximately 90 percent of our exabyte shipments," chairman and CEO Dave Mosley told analysts during a call to discuss Seagate's Q4 and full-year results. "Based on the long-term supply agreements in place today, the vast majority of our nearline exabytes are now allocated into calendar 2028," he said. Back in February, Seagate warned that its production capacity of nearline drives was fully allocated for this year, and it had started accepting orders for 2027. "Importantly, we are not seeing customers pull back on planning horizons," Mosley added, suggesting hyperscalers remain keen to reserve hard drive capacity years in advance. AI agents that carry out tasks with varying degrees of autonomy are the latest source of demand for nearline drives - at least according to Seagate's CEO. "With the transition from AI model training to inference to agentic applications, more data is generated and retained for historical context, compliance and future reuse. As these datacenter environments become larger and more complex, customers must balance performance, energy consumption and cost." Cloud operators already address these challenges through tiered storage combining high-performance memory and SSDs with mass capacity hard drives to optimize performance and economics at scale, he added. "Our recent white paper with SK hynix illustrates the importance of tiered storage for inference and agentic AI workloads, which show a direct benefit to hard drive storage. These workloads rely on persistent context across user interactions, and key-value or KV cache is used to retain and reuse that context efficiently." By distributing KV cache data across memory, SSD, and hard drive tiers, organizations can retain more context and avoid recomputing previously generated data. Seagate claims this increases demand for hard drive capacity while reducing the GPU resources spent recomputing old context, leaving more compute available for revenue-generating workloads. Of course, some will say that Seagate would big up the hard drive market. Its SSD business has been described as "utterly trivial," so the company largely depends on selling nearline HAMR disks to hyperscalers and large enterprises. CFO Gianluca Romano acknowledged that Seagate's capacity growth has mostly come from shipping drives with more disks and heads, rather than selling more units. "If you look at our last year, and if you look at the number of disks and the number of heads inside the box, they probably grew between 15 and 20 percent and the units were absolutely flat," he said, describing this as "a normal part of the business." All the same, demand for capacity helped lift Seagate's full-year revenue by 34 percent from $9.1 billion to $12.2 billion. For its fourth quarter, ended July 3, the biz reported revenue of $3.6 billion, up 50 percent from $2.4 billion a year earlier. It expects revenue of $4.1 billion, plus or minus $100 million, in the current quarter - which would represent year-on-year growth of 56 percent. Seagate says it is ramping up production of its Mozaic 4 platform, which supports drives of up to 44 TB, for major cloud providers. The next-generation Mozaic 5 remains on track for qualification shipments in late 2027 and is expected to deliver more than 5 TB per platter. ®

Seagate forecasts upbeat quarter on strong AI-driven storage demand

July 28 (Reuters) - Seagate Technology (STX.O), opens new tab forecast quarterly revenue and profit above estimates on Tuesday, as the rapid buildout of AI infrastructure fuels robust demand for its high-capacity hard disk drives. Shares of the Singapore-based company, which have more than doubled this year, rose over 8% in extended trading. Here are some details: Reporting by Anhata Rooprai in Bengaluru; Editing by Sahal Muhammed Our Standards: The Thomson Reuters Trust Principles., opens new tab

AI infrastructure fuels rising cloud storage demand across data centres

Enterprise customers are consuming more Seagate hard drives * AI growth keeps enterprise hard drive demand climbing across global cloud infrastructure * Cloud providers continue expanding storage despite massive investment in AI accelerators * Enterprise storage remains essential as artificial intelligence generates unprecedented data volumes Enterprise demand for high-capacity hard drives continues accelerating as artificial intelligence generates expanding datasets requiring reliable, affordable storage throughout increasingly complex cloud environments. That growing appetite for storage has intensified competition among cloud providers building artificial intelligence infrastructure, keeping enterprise hard drives firmly within long-term investment plans. Seagate's recent fiscal fourth-quarter and full-year 2026 financial results indicate continued demand from cloud data center customers despite no disclosure of future HDD allocation commitments. Enterprise customers continue driving demand for mass-capacity HDDs AI relies heavily on enormous storage capacity because valuable data must remain available long after computations are done. As organisations deploy larger AI models, the amount of stored information grows alongside computing requirements. This significantly increases the dependence on enterprise hard drives for economical long-term retention. Unfortunately, HDDs are becoming harder to secure, with manufacturers already booking long-term supply commitments years in advance. Many HDD manufacturers have locked in contracts extending into 2028 and 2029, meaning customers wanting drives that far out may already be shut out of available slots Seagate said robust cloud data center demand kept driving business growth, tying stronger storage purchases to AI infrastructure expanding across global markets. "As AI accelerates data generation and its value, we see durable long-term demand for mass capacity storage," said Dave Mosley, Seagate's chair and chief executive officer. Seagate expects strengthening exabyte demand through its Mozaic platform and differentiated HAMR technology roadmap as enterprise deployments continue expanding worldwide. While Mosley did not explicitly say customers are reserving Seagate's hard drive production through 2029, his remarks make clear that enterprise demand now sits at the core of the company's strategy. Financial performance supports the broader storage story Seagate's latest financial results provide additional evidence supporting enterprise storage demand. Its annual revenue increased during fiscal 2026, while Q4 performance exceeded company expectations for revenue. Operating cash flow reached $3.7 billion during fiscal 2026, while free cash flow totalled $3.1 billion after fourth-quarter operating cash flow reached $1.3 billion. Seagate also reduced total debt by $1.4 billion during fiscal 2026, including $302 million during the fourth quarter, ending with outstanding debt of $3.6 billion. Cash and cash equivalents reached $1.7 billion, while ordinary shares outstanding totalled 227 million and directors approved a quarterly dividend of $0.74 per share. Seagate expects first quarter fiscal 2027 revenue near $4.1 billion alongside non-GAAP diluted earnings per share of approximately $7.30, subject to stated variations. "Seagate's strong fourth quarter exceeded our expectations for revenue and non-GAAP EPS, capping a fiscal 2026 in which we grew," Mosley said. "Our performance is being driven by robust cloud data center demand and disciplined execution, and we see the momentum continuing in 2027." Seagate's rival, Micron, already made the move that Seagate is currently hinting at. It exited its Crucial consumer RAM businesslin 2025 to redirect supply toward enterprise customers. Micron said the shift was meant to "improve supply and support for our larger, strategic customers in faster-growing segments," cutting consumer buyers off from a manufacturer they had relied on for years. Seagate has not gone that far with hard drives, but Mosley's insistence that cloud demand is driving the business suggests it could prioritise enterprise demand if current trends continue. Via TechPowerUp Follow TechRadar on Google News and add us as a preferred source to get our expert news, reviews, and opinion in your feeds.

Seagate Hits Record Margins Amid AI Storage Boom - Seagate Technology Hldgs (NASDAQ:STX)

Seagate reported quarterly earnings of $5.71 per share, which beat the Street estimate of $5.09 by 12.18%, according to Benzinga Pro data. Quarterly revenue came in at $3.63 billion, which beat the consensus estimate of $3.49 billion and was up from $2.44 billion in the same period last year. Seagate shipped 218 exabytes in the June quarter, up 34% year over year (Y/Y), with data center customers representing 89% of total shipments. Data center shipments reached 195 exabytes, increasing 11% sequentially (Q/Q) and 43% year over year (Y/Y), while data center revenue rose to $2.9 billion, up 17% Q/Q and 57% Y/Y. Adjusted gross margin reached a record 52.7%, expanding 570 basis points sequentially from 47% in the prior quarter, driven by pricing execution and favorable product mix. Adjusted operating margin improved to 44.6%, up 710 basis points sequentially, in the quarter. Seagate generated $1.1 billion in free cash flow during the quarter and returned approximately $283 million to shareholders through dividends and share repurchases. Seagate ended fiscal 2026 with $1.7 billion in cash and cash equivalents and total liquidity of $3 billion, including its undrawn revolving credit facility. Management Commentary In the company conference call, Seagate said that data center demand remained the primary growth driver, contributing approximately 90% of exabyte shipments. Based on existing long-term supply agreements, most of Seagate's nearline exabyte capacity is committed through calendar 2028, with customers seeking additional capacity commitments extending into 2029 and beyond. Cloud customers continued to drive nearline storage demand, with Seagate recording three consecutive years of sequential quarterly exabyte growth and no indications of demand slowing. Enterprise demand also improved, with enterprise nearline revenue increasing for the fifth consecutive quarter as customers increasingly adopt modern tiered storage architectures across public cloud, private cloud, and on-premise environments. Outlook For the September quarter, Seagate expects revenue of approximately $4.00 billion to $4.02 billion, representing 56% Y/Y growth. The outlook includes non-GAAP operating expenses of around $300 million and a non-GAAP operating margin of around 50%, and non-GAAP EPS of $7.30 ± $0.20 Seagate expects continued revenue growth, margin expansion, and improved cash generation through fiscal 2027, supported by strong data center demand, increasing HAMR technology adoption, and disciplined execution. The company expects physical AI applications, including robotics and autonomous vehicles, to drive additional storage demand as these systems require significant volumes of historical and synthetic data for training and real-world operations. STX Price Action: Seagate Technology Hldgs shares were up 5.28% at $786.75 during premarket trading on Wednesday, according to Benzinga Pro data. Photo via Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

BofA sees more upside in Seagate's AI storage trade

Seagate Technology (STX) makes high-capacity hard drives used by cloud providers and large corporate data centers. Those drives store training files, model outputs, videos, customer records, and other data created by artificial intelligence applications. Cloud customers have been reserving Seagate's future hard-drive capacity years in advance as the amount of data they retain continues to grow. Seagate shares closed up about 2.29% at $764.43 on July 29 after the company reported stronger-than-expected fiscal fourth-quarter results and issued an upbeat forecast for the current quarter. Ahead of the report, TheStreet examined whether limited hard-drive supply would help Seagate raise prices or prevent it from shipping enough products to sustain growth. The quarter showed that higher prices and greater storage capacity per drive are currently offsetting the production constraint. Bank of America (BAC) analyst Wamsi Mohan maintained a Buy rating and a $1,150 price target after the results, according to a July 28 BofA note shared with TheStreet. The target represented about 54% upside from the July 28 price used in BofA's report. Seagate's forecast beat BofA's margin estimate Seagate reported fiscal fourth-quarter revenue of $3.63 billion, up 48% from a year earlier. Its adjusted gross margin reached a record 52.7%, exceeding BofA's 50.2% estimate. Key numbers from Seagate's quarter * $3.63 billion: Fiscal fourth-quarter revenue, up from $2.44 billion a year earlier. * $5.71: Adjusted earnings per share, compared with $2.59 a year earlier. * 52.7%: Adjusted gross margin, up from 37.9% a year earlier. * $4.1 billion: Seagate's fiscal first-quarter revenue forecast, plus or minus $100 million. * $7.30: Forecast adjusted earnings per share, plus or minus 20 cents. * About 50%: Forecast adjusted operating margin for the fiscal first quarter. The results and guidance appear in Seagate's supplemental financial report. BofA raised its fiscal 2027 revenue estimate to $17.47 billion from $16.86 billion. The bank increased its earnings estimate to $32.06 a share from $26.88. Its $1,150 target is based on 19 times projected calendar 2028 earnings of $61.42 a share, the BofA note said. BofA calculated Seagate's year-over-year incremental gross margin at 83.2% for the fourth quarter. That means Seagate generated about 83 cents of additional gross profit for every extra dollar of revenue compared with the same quarter a year earlier. The BofA note said Seagate's current-quarter forecast implies an incremental gross margin of about 88%. More storage per drive is lifting Seagate's profit A hard-drive unit measures the number of physical drives Seagate ships. An exabyte measures the amount of data those drives can store. Seagate shipped 218 exabytes during the quarter, an increase of 34% from a year earlier. About 90% of that capacity went to data-center customers. Data-center shipments increased 43% to 195 exabytes, and revenue from that market rose 57% to $2.93 billion. Seagate management discussed those results on the company's fiscal fourth-quarter earnings call. Management said physical drive shipments changed little over the past year. The number of recording heads and disks placed inside each drive increased about 15% to 20%. The configuration allows Seagate to sell more storage capacity without increasing the number of completed drives at the same rate. Seagate is also moving cloud customers toward Mozaic 4+, which uses heat-assisted magnetic recording. Heat-assisted magnetic recording, or HAMR, briefly heats a small area of a disk so more data can be written into the same physical space. HAMR products accounted for about 40% of Seagate's nearline exabyte shipment run rate at the end of fiscal 2026, according to the BofA note. Nearline drives are high-capacity hard drives designed for cloud and corporate data centers. BofA attributed Seagate's margin growth to higher prices, a larger mix of high-capacity products and lower production costs. The note said additional exabytes available above contracted volumes are being sold at higher prices because customer demand exceeds supply. memoriesarecaptured / Getty Images Cloud customers have reserved capacity through 2028 Seagate's build-to-order agreements cover customer demand through the end of fiscal 2027, according to the BofA note. Most of its nearline exabyte supply has already been allocated into calendar 2028. Customers have also started planning their storage requirements for 2029 and later. Those contracts tell Seagate how much capacity customers need before manufacturing begins. They also reduce the risk that the company produces expensive drives without committed buyers. Some recording components must enter production several quarters before the completed drive reaches a customer. CEO Dave Mosley has previously explained how AI applications generate data that must remain stored, including model outputs, user interactions and information retained by autonomous software agents. "As AI accelerates data generation and its value, we see durable long-term demand for mass capacity storage," Mosley said. Seagate's supply plan leaves little room for delays Seagate is relying heavily on higher storage density instead of rapidly increasing the number of drives it produces. It limits the risk of building factories that could become underused during the next decline in demand. It also makes each new product transition more important. Moving from 3 terabytes per disk to 4 terabytes and eventually 5 terabytes requires new manufacturing steps. Factories may briefly lose efficiency as Seagate adjusts equipment and improves production yields. New drives must also pass qualification tests at each cloud customer before volume shipments begin. A delayed qualification or weaker production yield would restrict the number of exabytes Seagate can deliver, even with customer orders already available. BofA identified slower cloud spending, weaker hard-drive pricing, and increased use of NAND flash storage as risks to its estimates. NAND flash is used in solid-state drives and can replace hard drives in some applications, although it generally costs more for large-scale data storage. Seagate's stock performance increases the consequences of an earnings miss. A week before the report, Jim Cramer suggested trimming Seagate shares after the stock had gained more than 400% over the previous 12 months. The next measurable test comes in the September quarter. Seagate expects revenue of about $4.1 billion, adjusted earnings of about $7.30 a share, and an adjusted operating margin near 50%. The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc. This story was originally published July 30, 2026 at 4:03 AM.

Wedbush raises the bar for two AI storage stocks

Seagate Technology (STX) and Western Digital (WDC) supply high-capacity hard drives used by cloud providers to store the growing volumes of data produced by artificial intelligence workloads. The companies have become two of the market's most closely watched AI infrastructure stocks as hyperscalers expand data-center capacity and reserve hard-drive supply years in advance. Both stocks moved sharply lower on July 27 despite a bullish analyst call. Seagate shares fell about 6.1% to $800 around midday July 27, and Western Digital declined about 6.1% to $487.87. Seagate will report fiscal fourth-quarter and full-year results after the market closes on July 28. Western Digital is scheduled to report on Aug. 5. The reports will show whether limited hard-drive supply is still helping the companies raise prices and protect margins. They will also show whether production constraints are limiting the number of drives Seagate and Western Digital can deliver. Wedbush analyst Matt Brysonraised his Seagate price target to $1,000 from $825 and lifted his Western Digital target to $650 from $540. Bryson maintained Outperform ratings on both stocks. SOPA Images / Getty Images Wedbush expects the HDD shortage to continue into 2027 Wedbush expects growing demand and limited hard-drive supply to continue well into 2027. Cloud providers are reserving high-capacity drives as they expand storage for AI training data, inference output, customer records and backups. The shortage gives Seagate and Western Digital more leverage in negotiating new customer agreements because hyperscalers have fewer suppliers with available capacity. However, higher market prices may take time to reach Seagate's financial results. The company has already committed much of its fiscal 2027 capacity through long-term agreements that set volumes and pricing in advance. That means the strongest benefit may come when existing agreements reset or Seagate signs contracts for later delivery periods at higher prices. Seagate had declined about 17% in July entering Monday, while Western Digital had fallen more than 20%, according to Investor's Business Daily. The pullback shows investors are waiting for more details on contract pricing, available capacity, and whether limited production will prevent the companies from accepting additional orders. AI expansion is increasing demand for mass-capacity storage AI models require storage before and after they run. Companies retain training datasets, model checkpoints, inference results, security logs, and customer information inside cloud data centers. High-capacity hard drives allow cloud providers to store large amounts of that information in a smaller physical footprint. A recent Bank of America report placed that demand inside a wider shift in technology investment. The debate around frontier technologies has shifted from experimentation to scalability. BofA did not mention Seagate or Western Digital in that section of the report. Its scalability framework helps explain why storage availability has become part of the AI infrastructure buildout alongside processors, networking equipment, and electricity. AI companies can experiment with limited computing capacity. Running those products for millions of customers requires much larger systems for computing, moving, and retaining data. The demand has already affected Seagate's production planning. CEO Dave Mosley said in May that building new factories would take too long and could leave the company with unused capacity if demand later weakened. Mosley said recording-head wafers had lead times exceeding nine months. Finished drives required roughly another quarter after that stage. Seagate later said its nearline capacity was almost fully allocated through calendar 2027. Nearline drives are high-capacity products designed for cloud and enterprise data centers. The storage shortage can also cap revenue growth Limited supply can lift prices when customers compete for available capacity. It creates a different problem when manufacturers cannot produce enough drives to accept additional orders. Seagate and Western Digital therefore need to show that pricing gains outweigh the revenue they may be leaving behind due to constrained production. Their margin benchmarks are already high. Seagate reported a 47% non-GAAP gross margin in its fiscal third quarter, up from 36.2% a year earlier. The company forecast fiscal fourth-quarter revenue of $3.45 billion, plus or minus $100 million. It projected non-GAAP earnings of $5 a share, plus or minus 20 cents. Western Digital reported fiscal third-quarter revenue of $3.34 billion and a non-GAAP gross margin of 50.5%. It forecast fourth-quarter revenue of about $3.65 billion and a non-GAAP gross margin of approximately 51.5%. Those results leave little room for a quarter that merely meets expectations. Investors will need evidence that new contracts are being signed at higher prices, recent margin gains can continue, and customer commitments extend beyond the capacity already reserved for 2027. Key numbers ahead of Seagate and Western Digital earnings * $1,000: Wedbush's new Seagate price target * $650: Wedbush's new Western Digital price target * 47%: Seagate's latest non-GAAP gross margin * 50.5%: Western Digital's latest non-GAAP gross margin * $3.45 billion: Seagate's fiscal fourth-quarter revenue guidance midpoint * $3.65 billion: Western Digital's fiscal fourth-quarter revenue guidance midpoint * Through 2027: Period for which Seagate's nearline capacity was almost fully allocated Wedbush's targets assume that constrained supply will continue supporting contract prices and margins. Seagate reports first, giving investors the earliest indication of whether the recent decline has reset expectations or reflects concern that profitability is approaching a peak. Western Digital will face the same test the following week. The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc. This story was originally published July 28, 2026 at 10:33 AM.

Seagate Sees a Better-Than-Expected Quarter on AI-Driven Demand

Seagate expects Q1 revenue of $4.1bn, plus or minus $100m, along with adjusted EPS of $7.30, both well above analysts' estimates. The hard-drive maker is benefiting from strong demand from cloud service providers, which are investing heavily in storage capacity to support the expansion of generative AI applications. The company is notably leaning on its heat-assisted magnetic recording (HAMR) technology, which boosts drive storage density using tiny lasers, without requiring new production lines. "As artificial intelligence accelerates data creation and increases its value, we expect sustained long-term demand for very high-capacity storage solutions," Chief Executive Dave Mosley said. That momentum enabled Seagate to raise prices and deliver strong Q4 results. Revenue climbed 48.5% y-o-y to $3.63bn, while adjusted EPS reached $5.71, both beating market forecasts.