The Zhitong Finance App learned that the financial report for the fourth quarter of fiscal year 2026 (ending July 3) and guidance for the next quarter announced by hard drive manufacturer Seagate Technology (STX.US) were significantly better than Wall Street expectations, and post-market trading rose sharply on Tuesday. Recently, leading AI concept stocks have collectively pulled back, and Seagate's stock price was clearly under pressure before the earnings report was released.
According to the company's announcement, for the quarter ending June (the fourth quarter of fiscal year 2026), Seagate achieved adjusted earnings per share (EPS) of 5.71 US dollars and revenue of 3.6 billion US dollars. Analysts surveyed by FactSet had expected adjusted EPS of $510 and revenue of $3.5 billion. Profit soared 120% year over year, and revenue increased 49%.
In addition, the company's operating cash flow for the quarter was 1.3 billion US dollars, free cash flow was 1.1 billion US dollars; the balance of cash and cash equivalents at the end of the period was 1.7 billion US dollars, and debt repayment for the quarter was 302 million US dollars, with a cumulative repayment of 1.4 billion US dollars for the full fiscal year.
The median of the company's revenue guidance for the current quarter was US$4.1 billion, while FactSet data showed that analysts' previous revenue forecast for the September quarter was US$3.78 billion.
Seagate CEO Dave Mosley said in a press release: “The company's performance growth was driven by strong demand for cloud computing data centers and strict enforcement discipline, and we expect this trend to continue until the 2027 fiscal year. As artificial intelligence accelerates data generation and enhances data value, the need for high-capacity storage is resilient over the long term.” “Relying on the Mozaic platform and the differentiated HMR (Heat-Assisted Magnetic Recording) technology roadmap, Seagate can efficiently respond to growing demand for EB-grade storage while driving profit growth and value creation.”
After the AI market surged, Seagate experienced a significant correction
During the regular trading session on Tuesday, Seagate's stock price fell 8.5%, but the rise was driven up after the market. At one point, it surged nearly 10%. As of press release, the latest increase was more than 5%, to $785.94.
Seagate and competitor Western Digital (WDC.US) jointly dominate the hard drive market. Cloud hyperscale vendors are competing to build AI data centers, bringing an unprecedented increase in demand for HDDs, and both companies are among the AI concept stocks with the highest growth. Seagate's year-to-date cumulative increase is 172%.
Recently, however, market concerns about the sustainability of AI capital expenditure have heated up, and Seagate's stock price has retreated sharply. The closing price on Tuesday was already 22% lower than at the beginning of the month. Investors are debating whether AI can bring long-term structural changes to the storage and memory components market—a cycle of ups and downs in the industry's history.
Institutions are collectively bullish, and there is still room for improvement
Wall Street was already very bullish on Seagate before the earnings report was released. Wedbush (Wedbush) analyst Matt Bryson raised Seagate's target price from $825 to $1,000 before earnings reports, maintaining an “excess” rating, and believes that HAMR hard drives are expected to win a new long-term agreement in the second half of 2026. Bryson pointed out that Seagate's production capacity has basically been scheduled until 2027, which strengthens the favorable supply and demand pattern.
Rosenblatt (Rosenblatt) is more aggressive, raising the target price from $1,000 to $1,300 on the grounds that the HDD industry will benefit from demand exceeding supply and price inflection points. The agency expects incremental gross margin to approach 80% as the average selling price rises and the unit cost falls at a rate of one digit to the lowest two digits.
Mizuho (Mizuho) raised its target price to $1,090 and raised its FY2027 EPS forecast to $28.35, higher than the market's consensus forecast of $26.57. Morgan Stanley also listed Seagate as the “most promising AI exposure direction” in the IT hardware field, believing that under the most optimistic pricing scenario, Seagate EPS is expected to grow tenfold between 2025 and 2028.
Currently, Wall Street's consensus rating for Seagate is a “strong buy,” with an average target price of around $1,020, which suggests there is still room for growth of more than 25% over the next 12 months.