--- title: "Seagate CEO: Higher NAND Prices Enhance HDD Advantages; Significant Room for Gross Profit Margin Expansion" type: "News" locale: "en" url: "https://longbridge.com/en/news/287783210.md" description: "Soaring NAND prices are reshaping the storage market landscape—Seagate's TCO advantage continues to stand out. Its new HAMR product, Mozaic 4, has completed customer certification, with per-TB pricing showing over 40% upside potential compared to the secondary market. Incremental gross profit margin exceeds 70%, and free cash flow is projected to surge from $800 million to $4.2 billion within three years. Bank of America maintains a Buy rating, raising the Price Target to $900" datetime: "2026-05-27T13:53:52.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/287783210.md) - [en](https://longbridge.com/en/news/287783210.md) - [zh-HK](https://longbridge.com/zh-HK/news/287783210.md) --- # Seagate CEO: Higher NAND Prices Enhance HDD Advantages; Significant Room for Gross Profit Margin Expansion The soaring price of NAND flash memory is bringing structural benefits to the hard disk drive (HDD) market. Dave Mosley, CEO of Seagate Tech, stated at an investor conference call hosted by Bank of America Securities that rising NAND prices are prompting customers to reevaluate their storage architectures. The comparative advantage of HDDs in terms of total cost of ownership (TCO) continues to strengthen, and the company’s gross profit margin still has significant room for expansion. Mosley disclosed during the meeting that Seagate has completed certification for its first-generation HAMR product, Mozaic 3, with all planned cloud service providers (CSPs). Additionally, two customers have already certified the second-generation product, Mozaic 4, which offers a storage capacity of 4TB per platter and up to approximately 44TB per drive. He pointed out that **global annual demand for nearline HDDs is climbing from 1.5 zettabytes (ZB) to about 2 ZB, a scale more than four times the entire NAND storage capacity of data centers. Relying solely on NAND simply cannot meet storage demands of this magnitude.** Regarding profitability, data from Bank of America Securities shows that Seagate’s incremental gross profit margin remains consistently above 70% (on a year-over-year basis). The company benefits from two paths for improvement: price increases and cost reductions. Bank of America analyst Wamsi Mohan noted that, according to his tracking, current trading prices for HDDs in the secondary market have reached $20 to $25 per TB (some being refurbished drives), while Seagate’s current quoted price is around $14, indicating clear upside potential for pricing. Supported by these judgments, Bank of America Securities maintains its Buy rating on Seagate and raised its 12-month Price Target from $840 to $900. This is based on an expected earnings per share (EPS) of $29.28 for 2027, corresponding to a 31x valuation, an increase from the previous 29x, reflecting greater confidence in the sustainability of demand and pricing stability. ## NAND Price Hikes Highlight HDD Competitive Advantages Mosley explicitly stated that **HDDs continue to outperform NAND in terms of TCO, and this advantage has become even more pronounced with the recent sharp rise in NAND prices.** He pointed out that NAND price trends have prompted customers to proactively seek more support from Seagate regarding performance dimensions. Seagate already possesses dual-actuator hard drive capabilities and can technically expand to four actuators to meet high-performance workloads that previously favored NAND. In terms of scale, Mosley cited data showing that global annual demand for nearline HDDs is currently about 1.5 ZB and is expected to soon increase to 2 ZB, more than four times the total capacity of NAND in global data centers. **He believes that the mainstream architecture of data center storage layers—"a small amount of memory at the front end + HDDs at the back end"—is highly entrenched,** stating that "this architecture will exist for a long time." He also noted that market discussions often overlook the substitution relationship between NAND and DRAM, focusing too much on HDDs. In reality, the irreplaceability of HDDs in large-capacity storage scenarios is more prominent. ## Dual Engines for Gross Profit Margin: Synergistic Promotion of Pricing and Costs Data from Bank of America Securities shows that **Seagate’s incremental gross profit margin remains consistently above 70%, and the company has two paths for gross profit margin expansion: pricing and costs.** Regarding pricing, Mosley stated that price increases will be advanced in a stable and rhythmic manner, rather than experiencing the sharp quarterly jumps seen in NAND. Wamsi Mohan pointed out that the selling price per TB is expected to exceed $20 over time, and transaction records of $20 to $25 have already appeared in the secondary market, indicating that the market has the capacity to accept higher pricing. On the cost side, Seagate’s core advantage lies in sharing platform architecture across product generations. When transitioning from 3TB per platter to 4TB and 5TB, most non-core components do not need to be replaced, effectively lowering technology iteration costs and supply chain risks. Mosley stated that as HAMR technology increases capacity with each generation, the company will achieve a better cost structure per TB and has already identified a technical path exceeding 10TB per platter. Bank of America predicts that Seagate’s operating margin will increase from 21.1% in fiscal year 2025 to 47.4% in fiscal year 2028. ## Accelerated Penetration of HAMR, Clear Technology Roadmap The commercialization of Seagate’s HAMR technology is entering an acceleration phase. Mosley disclosed during the conference call that Mozaic 3 has completed certification with all planned CSPs, while the second-generation product, Mozaic 4 (4TB per platter, approximately 40 to 44TB per drive), has been certified by two customers—a recent development. He expects that the third-generation product, with 5TB per platter, will be available before the end of the next calendar year. Relevant technology roadmaps have been shared with customers to support the synchronized advancement of their data center planning. Mosley stated that the certification pace for HAMR products is approaching the efficiency of mature magnetic recording products. Early technical concerns from customers have largely dissipated, and new-generation products are passing certification tests through routine processes. He believes the S-curve for HAMR technology is still extending upward. Internal photonics technology (key to driving capacity increases per platter) continues to make breakthroughs, and technological evolution will not stop at 10TB per platter. In terms of operational flexibility, Mosley pointed out that the shared platform architecture gives Seagate strong allocation capabilities in the face of demand fluctuations. If a customer reduces orders for high-capacity drives, the company can quickly reconfigure the same heads and disks into medium-to-low capacity products to meet market demand with a better cost structure. ## Demand Structure: Comprehensive Diffusion from Hyperscale to Enterprise Edge Mosley characterized current HDD demand as structural growth and explicitly stated that the company has not observed any signs of inventory hoarding. Shipped drives have been confirmed to be put into actual operation in data centers. He pointed out that annual storage capacity growth of over 25% is a very large figure, and from the company’s perspective, this growth rate may continue for the next five years. The factors driving demand are multidimensional: **the continued explosive growth of video content; the need to call upon massive unstructured datasets during the inference phase of large language models; the need for real-time sensor data for robotics and physical AI training; and rising demand for data snapshots and model checkpoint storage in AI decision-making processes.** Mosley also pointed out that CSPs storing video content across regions and in multiple formats (adapted for different screen sizes and resolutions) further amplifies the number of copies and total storage volume. Regarding customer structure, Mosley stated that beyond hyperscale cloud vendors, demand from traditional enterprise data centers and edge applications has shown significant recovery in the last two quarters, consistent with the company’s previous statements in quarterly reports. **He believes that the penetration of unstructured workloads into the edge—whether driven by sovereign data considerations or low-latency requirements—will continue to open up incremental space for HDDs in the edge market, and related demand is still in its early stages.** ## Deleveraging Nearing End, Buyback Cycle Approaching Mosley stated that the company’s focus this year was debt optimization, which is nearing completion. He expects that, assuming a stable market environment, the focus of capital returns will shift towards shareholders next year, with buyback intensity likely to increase. He also stated that capital expenditures will remain at 4% to 6% of revenue, mainly used to upgrade manufacturing tools and enhance magnetic recording density capabilities. Mergers and acquisitions are expected to remain primarily small-scale, supplementary acquisitions. Regarding financial data, Bank of America predicts that Seagate’s free cash flow will increase significantly from $818 million in fiscal year 2025 to $2.717 billion in fiscal year 2026, and further to $4.163 billion in fiscal year 2027, providing ample ammunition for future buybacks. Bank of America expects EPS to increase from $8.11 in fiscal year 2025 to $14.94 in fiscal year 2026 and $24.56 in fiscal year 2027, corresponding to forward P/E ratios of approximately 54x and 33x, respectively, based on the current stock price. ### Related Stocks - [STX.US](https://longbridge.com/en/quote/STX.US.md) - [BAC.US](https://longbridge.com/en/quote/BAC.US.md) - [BAC-Q.US](https://longbridge.com/en/quote/BAC-Q.US.md) - [BML-L.US](https://longbridge.com/en/quote/BML-L.US.md) - [BAC-L.US](https://longbridge.com/en/quote/BAC-L.US.md) - [BAC-K.US](https://longbridge.com/en/quote/BAC-K.US.md) - [BML-H.US](https://longbridge.com/en/quote/BML-H.US.md) - [BAC-N.US](https://longbridge.com/en/quote/BAC-N.US.md) - [BAC-E.US](https://longbridge.com/en/quote/BAC-E.US.md) - [MER-K.US](https://longbridge.com/en/quote/MER-K.US.md) - [BAC-O.US](https://longbridge.com/en/quote/BAC-O.US.md) - [BML-G.US](https://longbridge.com/en/quote/BML-G.US.md) - [BAC-M.US](https://longbridge.com/en/quote/BAC-M.US.md) - [BAC-B.US](https://longbridge.com/en/quote/BAC-B.US.md) - [BML-J.US](https://longbridge.com/en/quote/BML-J.US.md) - [BAC-S.US](https://longbridge.com/en/quote/BAC-S.US.md) - [BAC-P.US](https://longbridge.com/en/quote/BAC-P.US.md) - [8648.JP](https://longbridge.com/en/quote/8648.JP.md) ## Related News & Research - [Seagate Stock Plunges on Executive Warnings. Why Lead Times Matter so Much for STX Here.](https://longbridge.com/en/news/287073441.md) - [Are Wall Street Analysts Bullish on Seagate Technology Stock??](https://longbridge.com/en/news/286772566.md) - [China Begins Flooding The Market With DRAM And NAND Mamory Chips](https://longbridge.com/en/news/287576182.md) - [Why Sandisk Stock Just Popped Again](https://longbridge.com/en/news/287242212.md) - [Micron Stock Price Forecast — What Financial Analysts Expect Right Now](https://longbridge.com/en/news/287751302.md)