BofA Raises Earnings Estimate for Seagate Amid Strong AI Storage Demand
Seagate Technology (STX) reported strong fiscal fourth-quarter results, driven by increased demand from data centers and improved margins. The company's adjusted gross margin reached a record high of 52.7%, surpassing Bank of America’s estimate. BofA analyst Wamsi Mohan raised the firm’s revenue and earnings estimates for fiscal 2027 following Seagate’s performance, maintaining a Buy rating with an updated $1,150 price target. Seagate's data-center shipments rose by 43% to 195 exabytes during the quarter. The company is leveraging higher storage capacity per drive—achieved through increased recording heads and disks—to boost profitability without significantly increasing physical unit production. This strategy has helped offset supply constraints while supporting revenue growth. The firm’s fiscal first-quarter guidance also exceeded expectations, with a projected $4.1 billion in revenue and an adjusted operating margin of about 50%. BofA noted Seagate's incremental gross margins for the quarter were at 83.2%, indicating strong profitability from increased sales.
Topics: AI storage cloud computing hard drives Seagate earnings