Key Takeaways
- Seagate fell 16% today, along with Western Digital, as the AI sell-off after Democrats’ midterm sweep hit a second day.
- Rep. Yassamin Ansari called for a pause on advanced AI, but Seagate’s CEO says most of its nearline supply is under long-term agreements through 2028.
- Analysts expected Seagate’s EPS to more than double in fiscal 2027, and it trades at less than half its five-year average forward P/E.
- The sell-off looks overdone unless a pause becomes a bill in the new Congress.
Seagate Technology (STX) is down 16% today, its second straight drop since Democrats won both houses of Congress on Nov. 3. Western Digital (WDC) is sliding too.
A day later, Arizona Rep. Yassamin Ansari wrote on X: “Top of the Democratic agenda on day 1 needs to be a pause on advanced AI development.”
Seagate’s drives are already spoken for
CEO Dave Mosley said on Seagate’s Oct. 27 call that “the vast majority of our nearline exabyte supply is now allocated under long-term supply agreements through calendar 2028.”
Revenue jumped 61% to $4.23 billion in the quarter to Oct. 2. Analysts also expected EPS to keep climbing through fiscal 2028 (years to June):
With that supply already sold, I don’t see anything in this week’s news that should pull those estimates down.
Plus, the demand reaches well beyond the U.S., and Bloom showed it this morning: NTT DATA agreed to deploy 900 megawatts of Bloom’s on-site power at data centers around the world, starting in 2027. Bloom fell anyway.
Western Digital is in the same boat. CEO Irving Tan said on its Oct. 22 call that it has visibility into 2030 and 2031 with its top seven customers, and the company guided for revenue up 66% to 72% this quarter. Its next report will show whether any of those customers blink.
The selling hit chip equipment, too. Applied Materials (AMAT) is down 12%. Bloomberg reported that Micron suspended a $4.5 billion memory plant in Taiwan, though it tied the pause to a local labor dispute.
TIKR tracks 26 analysts on Seagate Technology. How many say “Buy”?
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Half its usual multiple
Seagate started today at about 13x forward earnings, less than half its five-year average of 26x. That’s after the stock had already dropped 30% in a month:
At today’s price, it’s even lower, about 11x.
A long way from a law
The way I see it, the market is selling Seagate as if the pause had already passed. That’s too pessimistic for a company whose supply is sold through 2028.
Of course, if the new Congress takes up Ansari’s pause in January, or hyperscalers push back on those agreements, I’d rethink this fast.
So what is Seagate stock actually worth?
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