---
title: "HDD demand surges, reinforcing the narrative of a \"storage supercycle\"! Seagate's performance exceeds expectations across the board, declaring that production capacity will be sold out by 2026"
type: "News"
locale: "zh-HK"
url: "https://longbridge.com/zh-HK/news/273917535.md"
description: "Seagate Tech announced its quarterly results, showing a surge in global demand for high-performance nearline HDDs and enterprise-grade SSDs, with results exceeding Wall Street expectations. As AI applications accelerate, the demand for storage devices from enterprises remains strong, with revenue expected to reach $2.9 billion in the third quarter of fiscal year 2026. Seagate's strong performance further reinforces the \"super cycle\" narrative in the storage industry, benefiting traditional storage suppliers such as Western Digital and Sandisk"
datetime: "2026-01-28T01:53:04.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/273917535.md)
  - [en](https://longbridge.com/en/news/273917535.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/273917535.md)
---

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# HDD demand surges, reinforcing the narrative of a "storage supercycle"! Seagate's performance exceeds expectations across the board, declaring that production capacity will be sold out by 2026

According to Zhitong Finance APP, Seagate Technology (STX.US), which ranks alongside SanDisk and Western Digital as one of the three major storage product leaders in the United States, announced its quarterly performance and future outlook after the U.S. stock market closed on Tuesday. **Data shows that the nearly "endless" explosive demand for high-performance nearline HDDs and enterprise-grade data center SSDs from global tech companies has driven this storage giant's quarterly performance and guidance to exceed Wall Street analysts' expectations across the board.** Seagate's robust growth performance, which significantly surpassed expectations, further strengthens the narrative of the so-called "storage supercycle" led by the three major storage chip manufacturers—Samsung, SK Hynix, and Micron Technology—as well as storage product giants like Western Digital and SanDisk.

In terms of the performance outlook, which is the market's primary focus, Seagate's management provided revenue and profit projections for the third quarter of fiscal year 2026 that are significantly higher than Wall Street analysts' consensus expectations, highlighting the continued strong demand for enterprise-grade HDDs and SSDs as companies accelerate the expansion of AI applications, leading to an exponential increase in AI computing power demand.

Global tech giants, including Meta, Microsoft, and Google, are increasingly aggressive in investing trillions of dollars in AI data centers and closely related AI infrastructure to train and efficiently operate large parameter language models (LMMs). **The ongoing explosive expansion of AI computing power demand is driving an unprecedented surge in storage needs, benefiting traditional storage hardware suppliers like Western Digital, Seagate, and SanDisk, whose enterprise-grade nearline HDDs and enterprise-grade NVMe SSDs are essential for storing the massive data required for the efficient operation of these large models and extensive AI training projects.**

**Seagate's management expects third-quarter revenue to be approximately $2.9 billion, with a fluctuation of $100 million; according to data compiled by LSEG, Wall Street analysts' average estimate is about $2.77 billion, making Seagate's revenue outlook significantly higher than the consensus expectations that have been continuously revised upward following the surge in Seagate's stock price since the fourth quarter of 2025.** The company anticipates an adjusted earnings per share (EPS) of about $3.40 for the third quarter, with a fluctuation of 20 cents; this also greatly exceeds analysts' recently revised EPS expectations of $2.96. Seagate's stock price has surged by 225% over the entire year of 2025, with a year-to-date increase of 35%, ranking among the strongest gains in the S&P 500 index. After the earnings report was released, Seagate's stock price rose by more than 10% in after-hours trading.

As of the second quarter ending in early January, Seagate's total revenue was approximately $2.83 billion, a significant year-on-year increase of 22%, surpassing analysts' average expectation of $2.73 billion; on an adjusted basis, the company's adjusted EPS was $3.11, while analysts' average expectation was an EPS of $2.81, significantly exceeding expectations.

**Even more significantly, Seagate's gross margin and operating margin for the second quarter reached historical highs, with a non-GAAP gross margin significantly increasing to a historical high of 42.2%, a notable improvement from 35.5% in the same period last year; the non-GAAP operating margin reached 31.9%, also setting a historical high, a substantial increase from 23.1% in the same period last year.** \*\*

![1769564378(1).png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20260128/1769564384677462.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

In the bull market for storage stocks over the past year, in addition to the significant price increases of the three major storage chip manufacturers SK Hynix, Samsung, and Micron, the stock prices of the three major storage product giants Seagate, Sandisk, and Western Digital are expected to rise by more than 200% by 2025. Among them, Sandisk, the leader in enterprise-level SSD storage systems, has seen an astonishing increase of nearly 600%. These storage chip and product line giants have significantly outperformed the US stock market and even the global stock market.

The core logic behind the strong price increases of the three major storage product giants like Seagate is that: **The rapid construction of AI data centers has not only driven a surge in HBM storage demand, leading to a complete migration of storage chip production capacity from consumer electronics to the much more complex manufacturing and testing processes of HBM, but also the three-tier storage stack of AI data centers (hot tier NVMe SSD, warm tier/nearly line HDD, cold tier object and backup) is simultaneously expanding at an exponential rate. Meanwhile, the long-standing supply constraints in the HDD industry, the recovery of the NAND cycle, and the long-term volume locking by cloud vendors have allowed the volume, price, and order visibility of these three companies to rise simultaneously.**

## HDD and SSD demand surges, driving Seagate's performance and outlook beyond expectations

In the earnings conference call, Seagate's CEO Dave Mosley stated that **the revenue from "almost all end markets" experienced significant quarter-on-quarter growth, setting new records for the company in terms of EB-level shipments, gross margin, operating profit margin, and non-GAAP earnings per share. He described the market storage demand as "exceptionally strong," especially in the data center end market, and pointed out that the global large-scale AI data centers continue to see substantial growth in demand for high-capacity nearline hard drives**, with demand for enterprise edge computing also continuously improving.

Seagate Technology CEO Mosley stated in a press release: “As AI applications further enhance the value and economic value of data creation, modern data centers increasingly require EB-level storage solutions that combine high performance and high cost-effectiveness.” “Our areal density-oriented product roadmap enables us to meet the evolving storage demands and EB-level data growth while creating significant value for our customers and shareholders in the coming years.”

Regarding Seagate's capacity planning for 2026, Mosley stated that **Seagate's nearline HDD capacity is "fully sold out for the entire year of 2026," and the company expects to start accepting orders for the first half of 2027 in the coming months.**

The reason Seagate significantly benefits from the unprecedented global AI computing power surge, which brings about an almost "endless" storage demand, is primarily due to the explosive demand for Seagate's data center-level nearline HDDs and high-performance SSDs from ultra-large-scale AI data centers like "Stargate." Seagate's core product for AI data centers, the nearline HDD, represented by the Mozaic 3+/HAMR platform, focuses on a single disk capacity of 30TB, directly addressing the capacity pain points of AI data centers' "data lakes/object storage/archiving." The Seagate Nytro 5060 (PCIe Gen5 enterprise-level NVMe) is positioned as a high-performance data center SSD, with a nominal maximum bandwidth of approximately 14.9GB/s and up to 3.3M IOPS, and a 2.5-inch form factor capacity of up to 30.72TB, featuring dual-port for high availability. The NAND type is labeled as 3D eTLC, which aligns well with the durability demands of "hot data/high-speed landing."

In the rapidly expanding AI training/inference systems, AI corpora, retrieval libraries (RAG corpus), observational data (logs/tracing/telemetry), compliance retention, and backups ultimately need to achieve the lowest TCO at the capacity layer. Therefore, when the prices of data center-level SSDs led by SK Hynix and Micron are significantly raised due to supply-demand tensions, large data centers are more likely to adopt a tiered/hybrid architecture of SSD+HDD to control costs.

In other words, when the prices of high-performance SSDs at the data center level rise significantly due to tight NAND prices, data centers tend to use a relatively small number of SSDs for caching/hot layers and rely on HDDs for capacity/cold layers, thus enhancing the demand resilience for HDDs. For workloads such as AI Agents/RAG/vector retrieval/online inference that require "small random reads, high concurrency, and are sensitive to tail latency," the value of NVMe far exceeds that of HDD/object storage; whereas for "massive raw data, log retention, and archiving," the unit cost advantage of objects/HDDs is greater.

Whether it is Google's enormous TPU AI computing cluster or the massive NVIDIA AI GPU computing cluster, both rely on the comprehensive integration of AI chips with HBM storage systems, as well as the current tech giants accelerating the construction or expansion of AI data centers, which necessitate large-scale purchases of server-level DDR5 storage and enterprise-level high-performance SSDs/HDDs. Samsung Electronics, SK Hynix, and Micron Technology, along with Seagate, are all focused on certain subcategories within these three core storage areas: HBM, server DRAM (including DDR5/LPDDR5X), and high-end data center-level SSDs/HDDs, making them the most direct beneficiaries in the "AI memory + storage stack," effectively reaping the "super dividends" from the AI infrastructure wave.

On Wall Street, Morgan Stanley, Nomura, and Bank of America are proclaiming the arrival of the "super cycle of storage chips" driven by the AI wave, and the intensity and duration of this cycle may far exceed that of the 2018 "cloud computing era-driven storage super bull market."

It is noteworthy that while revenue and profits have significantly increased, Seagate has also demonstrated strong cash generation capabilities. This storage giant generated $723 million in operating cash flow and $607 million in free cash flow in its second fiscal quarter The company's latest capital allocation strategy has also attracted market attention: on one hand, it repaid $500 million of convertible preferred notes to optimize its capital structure; on the other hand, it distributed $154 million in cash dividends and announced a quarterly dividend of $0.74 per share to be paid in April 2026. Some Wall Street analysts pointed out that **this dual operation of "de-leveraging + shareholder returns" highlights Seagate's management confidence in future cash flow growth under strong demand for HDDs and SSDs**, but it may also suggest that the company believes there are currently no large-scale capital expenditure opportunities with higher returns.

## The "storage supercycle" is expected to last until 2028! The era of HDDs and SSDs is coming

Analysts from Nomura in Japan also judge that this round of "storage chip supercycle," which began in the second half of 2025, will last at least until 2027, **and that meaningful new supply will not appear until early 2028 at the earliest.** Nomura stated that investors should continue to overweight storage leaders in 2026, treating the "price-profit-valuation" triad of storage chips as the main line of storage investment in 2026, rather than viewing storage solely as a single theme of HBM. The institution expects the profits of the three major storage chip companies to reach historic highs.

A forecast from Micron Technology, a major U.S. storage chip manufacturer, indicates that the total potential market for HBM is expected to grow at a compound annual growth rate of about 40% by 2028, **increasing from approximately $35 billion in 2025 to about $100 billion in 2028. The overall demand on the NAND side tends to follow the continuous expansion of HBM, suggesting that the current storage supercycle may last from 2024 to 2028.**

Recent research reports released by JP Morgan show that the wave of AI inference is allowing NAND flash memory to break free from the fate of being a "cyclical commodity," evolving into a high-growth AI infrastructure asset. This also means that the three major storage giants, SanDisk, Seagate, and Western Digital, are expected to achieve a profit growth trajectory stronger than currently anticipated.

JP Morgan believes that **as AI workloads shift from training to inference, and with supply bottlenecks for HDDs (hard disk drives) in the nearline storage sector, the NAND market around enterprise SSDs is experiencing unprecedented structural growth. Investors are seriously underestimating the strategic position of NAND in the era of AI inference. JP Morgan predicts that the blended average selling price in the NAND sector will rise significantly by 40% year-on-year in 2026.**

The latest launch of the **"Context Inference/Long Context Inference" BlueField platform (ICMS: Inference Context Memory Storage) by AI chip superpower NVIDIA (NVDA.US) can be seen as a significant long-term growth catalyst for "hot/warm layer enterprise SSDs/NVMe" and cold/warm data seas (i.e., Nearline HDD/object storage).**

NVIDIA clearly positions ICMS in its technical blog as a new G3.5 layer: a pod-level "Ethernet-attached flash tier" specifically designed to store latency-sensitive, reusable inference contexts (KV cache), emphasizing that it provides "PB-level shared capacity" for each GPU pod Using higher bandwidth/higher energy efficiency to support KV cache reuse and prefetching, thereby reducing GPU stalls and increasing tokens/s. It is also clearly stated in the Figure/architecture description: the ICMS node is "built on SSDs," with BlueField-4 handling the KV I/O plane, and it must efficiently terminate NVMe-oF and object/RDMA protocols.

The aforementioned "contextual reasoning/long contextual reasoning" BlueField platform, **translated into storage "benefit logic," means that this platform has added a high-bandwidth flash layer between local SSDs and shared storage for "context (KV cache)," which in turn leads to a need for more enterprise-grade SSDs/NVMe (including NVMe-oF type SSD pools). Another major benefit is that "as the scale of Agentic/long contextual reasoning increases, the persistent data (dialogue history, retrieval corpus, logs, artifacts) will overall be larger," and object storage along with its underlying capacity media (nearline HDD or capacity SSD) remains the lowest cost "data ocean."**

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