Seagate Reports Record Gross Margin of 52.7% in Q2 FY2026
Seagate Technology Holdings (STX) reported a non-GAAP gross margin of 52.7% for the June quarter, marking its thirteenth consecutive quarter of expansion and an increase of approximately 570 basis points sequentially. The CFO, Gianluca Romano, attributed this to Seagate's ability to raise prices on cloud customers without significantly impacting their budgets due to storage costs being a small portion—'low to middle single digit'%—of total capital spending. The pricing strategy shift began about three years ago and has nearly tripled gross margins. This is supported by the adoption of HAMR (heat-assisted magnetic recording) technology, which increases drive capacity per unit cost. Seagate's top cloud customers are already using 30-terabyte drives with plans to adopt higher-capacity models in late calendar year 2027. Despite strong financial performance—$12.2 billion revenue for fiscal 2026 and $5.71 adjusted EPS beating estimates—the stock has fallen due to concerns over AI efficiency reducing infrastructure demand.
Tickers: $STX
Topics: CFO Commentary Gross Margin Pricing Strategy Seagate