---
title: "\"Hard Drive Giant\" Seagate Tech Quarterly Results Far Exceed Expectations; 2027 Capacity Nearly Sold Out, CEO Declares Entry into \"New Era of Structural Growth\""
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/284467210.md"
description: "The company's third fiscal quarter revenue reached $3.11 billion, a 44% year-over-year increase, with non-GAAP earnings per share (EPS) of $4.10, doubling from the previous year. More encouraging to the market was the fourth fiscal quarter guidance: revenue of $3.45 billion and EPS of $5.00, approximately 9% and 26% higher than analyst expectations, respectively, sending after-hours shares soaring 18%. The CEO announced entry into a \"new era of structural growth,\" raising the annual revenue growth target to at least 20%, with nearline hard drive capacity essentially locked in through the end of 2027"
datetime: "2026-04-29T00:36:14.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/284467210.md)
  - [en](https://longbridge.com/en/news/284467210.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/284467210.md)
---

# "Hard Drive Giant" Seagate Tech Quarterly Results Far Exceed Expectations; 2027 Capacity Nearly Sold Out, CEO Declares Entry into "New Era of Structural Growth"

After the U.S. market close on April 28 local time, hard drive giant Seagate Tech released its financial results for the third quarter of fiscal year 2026. Revenue, profits, and guidance for the next quarter all comprehensively exceeded Wall Street expectations. Following the announcement, Seagate’s stock surged more than 18% in after-hours trading, while competitor Western Digital rose about 11%, SanDisk climbed approximately 4%, and Micron Technology also gained around 3.5%.

The correlated reaction across the entire storage sector reflects the market’s repricing of a core question: How long can AI-driven storage demand last? Seagate’s earnings report seems to provide an answer—at least it hasn’t peaked yet.

**Seagate Tech CEO Announces Storage Enters "New Era of Structural Growth," Raises Annual Revenue Growth Target for Coming Years from Low-to-Mid Double Digits to At Least 20%; Nearline Hard Drive Capacity Nearly Fully Pre-sold Through 2027.**

## Earnings Highlights: Revenue Up 44% Year-Over-Year, Cash Flow Hits Decade High

**This quarter, Seagate reported revenue of $3.11 billion**, a 44% year-over-year increase, surpassing analysts' expectation of $2.96 billion.

**Performance on the profit front was even more impressive.** Non-GAAP earnings per share (EPS) came in at $4.10, a 115% increase from $1.90 in the same period last year, significantly beating the market expectation of $3.51. GAAP EPS was $3.27, compared to $1.57 in the same period last year.

**Regarding gross margin**, non-GAAP gross margin reached 47%, an increase of 480 basis points from the previous quarter; non-GAAP operating margin expanded to 37.5%, up 560 basis points from the previous quarter.

(Image source: Seagate Tech official website, translated into Chinese, same below)

**Cash flow was another highlight this quarter. Seagate generated free cash flow of $953 million, a significant year-over-year increase. CFO Gianluca Romano stated during the conference call that this was the "highest level in over a decade."** Meanwhile, the company repaid $641 million in debt this quarter and returned $191 million to shareholders through dividends and buybacks.

## Guidance Stuns Market: Next Quarter EPS Guidance 26% Higher Than Expected

What truly excited the market was Seagate’s guidance for the fourth quarter.

The company expects fourth-quarter revenue of $3.45 billion (plus or minus $100 million), whereas analysts had previously expected only $3.16 billion; non-GAAP EPS guidance is $5.00 (plus or minus $0.20), compared to analysts' expectation of $3.97.

This means Seagate’s expectation for next quarter’s EPS is about 26% higher than Wall Street consensus.

CFO Gianluca Romano stated during the conference call, "Based on the midpoint of the revenue guidance, non-GAAP operating margin is expected to reach the lower end of the 40% range." This implies that Seagate’s operating margin will continue to climb rather than stagnate.

## **Why Can Prices Continue to Rise? Capacity Almost Sold Out, Already** Locked In Through 2027

The core logic behind this round of storage market momentum is a fundamental imbalance between supply and demand.

CEO Dave Mosley directly pointed out in the earnings report: **"We believe Seagate is entering a new era of structural growth, with AI applications amplifying data creation and supporting sustained storage demand."**

Specific figures support this judgment:

-   Shipments this quarter reached 199 exabytes, a 39% year-over-year increase;
    
-   The data center market contributed 88% of shipments and 80% of revenue, totaling $2.5 billion, a 55% year-over-year increase;
    
-   **Nearline hard drive capacity has secured supply agreements with nearly all major cloud providers and hyperscale customers, with capacity almost fully allocated through the entire year of 2027**;
    
-   The company is currently working with customers on build-to-order contracts for fiscal year 2027, locking in specific configurations and prices; strategic planning discussions have extended to 2028 and beyond.
    

Regarding investors' primary concern of "whether price increases can sustain," Seagate management provided quite clear signals.

CFO Gianluca Romano revealed during the conference call that the company has completed build-to-order contracts for fiscal year 2027, locking in specific product configurations and pricing. **"Nearline capacity is basically fully allocated for the next four quarters... We are confident in achieving quarter-over-quarter growth in revenue and profits throughout fiscal year 2027 in terms of product mix, pricing, and shipments."**

**On pricing strategy, he emphasized: "We have executed this strategy for 12 consecutive quarters and will continue to advance it."**

Mosley said during the conference call, "We see rising demand. Our goal remains to lock in prices with customers, giving them predictability and reliable economic plans for building data centers, while we also know what returns our factories can achieve."

## How AI Drives Hard Drive Demand? The Logic Is More Solid Than Imagined

Many people’s impression of hard drives still rests on "traditional storage," but the data logic of the AI era is reshaping this perception.

**This quarter, the data center market contributed 88% of Seagate’s shipments and 80% of its revenue, with data center revenue reaching $2.5 billion, a 55% year-over-year increase.** Among these, nearline HDDs (high-capacity hard drives designed specifically for large-scale data centers) accounted for nearly 90% of total shipments.

Dave Mosley explained the transmission path of AI demand during the conference call: **"We are at an inference turning point—computing infrastructure is shifting from cyclical training to an engine that continuously generates massive amounts of data. Leading AI chatbots handle billions of user requests daily, each consuming and producing multimodal outputs, driving unprecedented growth in data creation."**

Going further is Agentic AI: no longer sporadic interactions, but continuously automated workflows that constantly ingest inputs, generate reasoning, and store persistent outputs, significantly increasing data intensity and long-term storage needs.

Mosley also mentioned scenarios for Physical AI: an autonomous vehicle can generate up to 4TB of data per hour, with some data needing to be retained for 5 to 10 years for compliance. "These inference applications are simultaneously creating incremental demand for both cloud and local storage."

Another data point he cited was quite compelling: **The remaining performance obligations (RPO, viewed as a revenue reservoir) of the world’s top three cloud service providers have nearly doubled, reaching a staggering $1.1 trillion**—"This is a clear signal of continued growth."

## HAMR Technology Accelerates Deployment, Clear Roadmap for Next-Generation Products

Understanding why Seagate can continue to raise prices and expand margins requires looking at its core technological route—HAMR (Heat-Assisted Magnetic Recording) technology, and the Mozaic product platform based on it.

Simply put, traditional hard drive technology (PMR) has approached physical limits in single-platter capacity, while HAMR uses laser heating to achieve higher density writing, allowing more capacity to be packed in under the same hardware costs.

**Mozaic 4 (Second-Generation HAMR)**: Single-platter capacity exceeds 4TB, with maximum single-drive capacity reaching 44TB, an increase of over 30% compared to the first-generation Mozaic, without increasing the number of platters and heads, keeping material costs basically unchanged. Mosley stated that shipments to customers began in late March, and by the end of 2026, Mozaic 4 is expected to account for the majority of total HAMR shipment bytes.

**Mozaic 5 (Third-Generation HAMR)**: Target single-drive capacity of 50TB, with qualification samples expected to be provided to customers by the end of 2027.

This logic bears some resemblance to the "Moore's Law" of the chip industry: replacing simple addition of parts with increased technological density, each generation provides customers with more capacity without significantly increasing costs, while Seagate’s own cost per byte decreases and profit margins rise.

Romano explained the cost advantage during the conference call: "The main driver for future cost reductions is the mixed shift of products toward higher capacity models—the 40TB HAMR drive will be the core driver, rather than adding more materials."

## **Annual Revenue Growth Target Raised from "Low-to-Mid Double Digits" to "At Least 20%"**

This may be the most weighty statement from this earnings report.

Mosley announced during the conference call that the annual revenue growth target for the coming years has been **significantly raised from the "low-to-mid double digits" set at the previous Investor Day to "at least 20%."**

He provided three supporting reasons:

1.  **Sustainability of Storage Demand**: AI accelerates data creation, with simultaneous volume growth in cloud data centers, enterprise edge, and Physical AI scenarios;
    
2.  **Certainty of Technology Roadmap**: The Mozaic platform is progressing as planned, with the transition pace of HAMR products meeting or exceeding expectations;
    
3.  **Operational Discipline**: The build-to-order model improves demand visibility, supporting pricing and supply discipline; capital expenditures are strictly controlled within the 4%-6% range of revenue.
    

He also added a data point to support the judgment that "cloud investment continues": this quarter marks the **10th consecutive quarter** of revenue growth from Seagate’s cloud customers, who have cumulatively committed hundreds of billions of dollars in infrastructure capital expenditures.

## **Capital Returns: After Debt Resolution, Focus Shifts to Buybacks**

In recent quarters, Seagate has used substantial cash flow to repay debt. In the first three quarters of this fiscal year, total debt has been reduced by approximately $1.1 billion, bringing the net leverage ratio down to 0.7x.

Romano stated that the approximately $400 million in convertible bonds maturing in 2028 would be handled in this quarter or the next. Regarding subsequent capital deployment direction, he said directly, "Most will likely be used for stock buybacks. We are already operating in the market, and may increase intensity in the coming quarters."

Mosley summarized, "Last year we focused on replenishing working capital and repairing the supply chain. Now we return to our previous direction—returning value to shareholders."

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