Key Stats for Seagate Stock
- YTD Price Change for Seagate stock: 225%
- $STX Share Price as of Dec. 29: $281
- 52-Week High: $309
- $STX Stock Price Target: $297
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What Happened?
Seagate (STX) stock has been one of the biggest winners of 2025, climbing 225% year-to-date as AI data centers scramble to secure storage capacity.
The Fremont, California-based company is riding a wave of unprecedented demand for its high-capacity hard disk drives, which have become critical infrastructure for storing the massive datasets required to train large language models.
The momentum accelerated after Seagate announced it would join the Nasdaq-100 Index following the annual reconstitution. This means index-tracking funds will need to buy Seagate stock to match their portfolios, creating additional buying pressure.
But the real story is the supply-demand imbalance. CFO Gianluca Romano revealed at recent investor conferences that the gap between supply and demand has actually widened over the last six months.
Seagate’s nearline capacity is essentially sold out through calendar 2026, with long-term agreements extending into 2027 and even early 2028.
The company reported revenue of $2.63 billion in fiscal Q1 of 2026, up 21% year-over-year, and guided for $2.7 billion in Q2. More impressively, gross margins have roughly doubled over the past 10 quarters as Seagate maintains disciplined pricing while customers desperately seek more storage capacity.
Seagate is also ramping production of its next-generation HAMR (Heat-Assisted Magnetic Recording) technology. The company has already qualified five major cloud customers for its 30-terabyte Mozaic 3 drives and is now migrating them to 40-terabyte Mozaic 4 drives.
Romano said Seagate expects gross margins of more than 50% on HDD sales over the next 12 months as it scales higher-capacity products.
The company generated $427 million in free cash flow in Q1, putting it on track for roughly $1.7 billion annually.
With leverage at just 1.5x and $2.4 billion in total liquidity, Seagate has ample financial flexibility to invest in innovation while returning cash to shareholders through dividends and buybacks.
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What the Market Is Telling Us About STX Stock
The market’s enthusiasm for Seagate stock reflects the belief that AI-driven storage demand will remain strong for years. Video applications, autonomous driving data, and robotics are all emerging as massive consumers of storage products beyond traditional cloud workloads.
However, some cracks are starting to show in the bull case. While Seagate and Western Digital control the vast majority of HDD sales, customers are increasingly turning to solid-state drives as an alternative. NAND prices have climbed in recent months as hyperscalers buy up SSD capacity to supplement the constrained HDD supply.
SSDs cost significantly more per terabyte than HDDs, but they offer advantages that can offset the price difference.
They consume less power, take up less physical space, access data faster, and potentially last longer. As data centers prioritize power efficiency, the total cost of ownership gap between HDDs and SSDs is narrowing.
Romano pushed back on this concern, arguing that customers won’t pay “6x or 8x more” for storage when HDD capacity is available.
He emphasized that power constraints, not storage, are the main bottleneck for new data center builds today. Still, if NAND manufacturers scale capacity faster than the HDD duopoly, it could pressure Seagate’s pricing power.
Seagate stock trades at 27 times forward earnings, which doesn’t look cheap given the cyclical nature of the HDD business.
The storage market has historically swung between tight supply and oversupply, causing wild earnings volatility. Unlike software companies with recurring revenue, Seagate faces substitution risk from SSDs and lacks strong competitive moats beyond its scale.
Some analysts worry that current earnings estimates reflect overly optimistic assumptions about demand sustainability. If long-term orders soften or customers shift more aggressively to SSDs in 2027, Seagate stock could face multiple compressions even if near-term results remain strong.
On the bullish side, Romano noted that Seagate isn’t seeing any signs of demand weakening. The company continues to push unfilled orders into the future rather than expanding unit capacity, which should moderate downside risk when the cycle eventually turns.
Management believes that by maintaining discipline and focusing on higher-capacity drives, they can avoid the inventory buildups that caused previous down cycles.
The addition to the Nasdaq-100 provides near-term technical support, and Seagate’s improving credit profile gives it financial flexibility to navigate different scenarios.
For investors willing to accept cyclical risk, Seagate stock offers exposure to AI infrastructure buildout at a more reasonable valuation than many software and semiconductor names.
The key question is whether this storage demand cycle has legs into 2027 and beyond, or if it’s closer to peak than the bulls believe.
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How Much Upside Does Seagate Stock Have From Here?
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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 stocks mentioned. Thank you for reading, and happy investing!
