Seagate Technology (STX) shares are down about 12% this morning (trading at about $830) after Nikkei reported that Toshiba plans to double its hard disk drive production capacity for AI data centers. Western Digital (WDC) is down about 10%.
Toshiba holds just over 10% of the hard drive market by capacity and wants 30%. The broader market is up about 0.4%.
What Toshiba plans
- Double production capacity for AI data center drives within its fiscal 2027
- About 60 billion yen (roughly $380 million) to expand its Philippines plant
- Its first major hard drive investment in about five years
- Toshiba is the No. 3 maker behind Seagate and Western Digital, in an industry with only three
The target customers are the same AI data centers that have fueled Seagate’s and Western Digital’s results.
Why Seagate needs tight supply
Seagate’s run has been built on scarce high-capacity nearline drives. Its gross margin more than doubled in three years, from 19.1% in fiscal 2023 to 45.6% in the year to June 2026.
That reflects stronger pricing, richer product mix and improving drive economics.
Consensus has normalized EPS climbing from $15.58 last fiscal year to $35.78 in fiscal 2027 and $55.37 in fiscal 2028, according to TIKR. That fiscal 2027 figure is more than double last year’s.
Those estimates leave little room for prices to soften.
What’s next for STX stock
At about $850, Seagate trades at roughly 55 times last year’s normalized earnings but about 24 times fiscal 2027 consensus. I think the market is right to flinch: the stock looks reasonable only if that earnings jump arrives, and a rival doubling capacity is the clearest threat to it.
A plan isn’t a factory, though. If AI storage demand keeps outgrowing supply, pricing could hold. Watch how fast Toshiba’s capacity reaches the market and what Seagate says about pricing at its next report.
So what is Seagate Technology stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
