Both Seagate Technology Holdings plc ((STX Quick QuoteSTX - Free Report) ) and Micron Technology ((MU Quick QuoteMU - Free Report) ) are key players in data infrastructure, with STX delivering large-capacity hard drives for enterprise and cloud data centers, and MU supplying high-performance memory (DRAM/NAND) critical for servers and AI workloads.

The AI data storage market is expanding rapidly as hyperscalers and enterprises race to support GPU clusters and high-bandwidth workloads. Per a report from Fortune Business Insights, the global data storage market is estimated to witness a CAGR of 17.2%, reaching $774 billion by 2032 from $255.3 billion in 2025.

Both STX and MU are poised to benefit from surging demand for high-capacity drives and advanced memory needed to power AI infrastructure. So to pick a winner between these two, let's get into an in-depth analysis of how each company stacks up, the tailwinds they face, the risks, and which investor profile each best suits.

The Case for STX Stock

Seagate’s performance is buoyed by a well-defined product roadmap focused on enterprise, exabyte-scale storage solutions that help organizations unlock greater value from their data. This strategic advantage strengthens the company’s ability to deliver meaningful benefits to both customers and shareholders. With strong demand visibility, it is ramping up shipments of its Mozaic HAMR products, now qualified by five major cloud providers. These high-performance, durable and cost-effective drives support existing workloads, such as social media and video platforms, as well as new AI-driven applications.

As AI drives data creation and consumption, Seagate is well-positioned for continued profitable growth. It shipped more than 1 million Mozaic drives during the September quarter. It is also qualifying its Mozaic 4+TB-per-disk platform (up to 44TB) with a second major cloud provider, with volume production expected in early 2026. The company is on track for a 50% nearline HAMR exabyte crossover in the back half of 2026. It is advancing toward 5TB-per-disk technology by early 2028, with 10TB-per-disk lab demos targeted for the same period. These media and photonics breakthroughs solidify Mozaic HAMR as Seagate’s core competitive advantage for the next wave of data-infrastructure growth.

Seagate’s business transformation and strong product portfolio set it up well for long-term growth. The company has streamlined its revenue into two core markets - Data Center, which includes nearline drives and systems for cloud, enterprise and VIA customers, and Edge IoT, which encompasses consumer, client and NAS-focused segments. Demand from global cloud providers remains strong, supported by a steady recovery in enterprise OEM markets. Seagate expects these trends to continue, with cloud growth leading. As AI shifts from training to large-scale inferencing, high-capacity storage needs are accelerating, driven by checkpointing and massive dataset requirements.

In addition, Seagate’s evolving business model and robust product roadmap position it for stronger profitability and cash generation in fiscal 2026. The expected cash flow gives management flexibility to fund innovation, pursue acquisitions and support growth initiatives. At the same time, the company has consistently delivered meaningful shareholder returns through buybacks and dividends. Its ability to reduce debt by $684 million in fiscal 2025 while still maintaining sizable capital returns reflects a disciplined and balanced approach to capital allocation.

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However, Seagate continues to face several challenges, including foreign exchange volatility, intense industry competition and persistent macroeconomic and supply chain pressures. Its elevated debt levels also add financial risk, potentially restricting its ability to fund dividends, repurchases and acquisitions. These factors could limit growth and adversely impact long-term performance.

The Case for MU Stock

Micron is benefiting from the rapidly expanding AI-driven memory and storage markets, supported by healthier inventory levels across key end markets that are lifting revenue. Demand for its HBM products has been particularly strong. For MU, AI is both a major demand catalyst and a productivity accelerator, enhancing product design, technology development and manufacturing efficiency. Micron is strengthening its position with customer-focused execution, advanced technology and the launch of its G9 NAND products, including the first PCIe Gen6 SSDs. In the near term, MU expects HDD supply shortages to further support NAND demand and create a more balanced market environment.

Micron’s data center business has become a key growth driver, accounting for 56% of total revenue in fiscal 2025 with solid 52% margins. The HBM segment continues its steady growth, with fiscal fourth-quarter revenue hitting nearly $2 billion, reflecting an annualized run rate of about $8 billion driven by HBM3E adoption. Looking forward, Micron expects its HBM market share to keep increasing, aligning with its broader DRAM share goals.

Data center server demand in 2025 is now forecasted to rise by around 10%, higher than MU’s earlier estimates of mid-single-digit growth. Traditional server demand, which was previously flat, is projected to grow in the mid-single-digit range, supported by growing enterprise workloads and the increasing use of AI agents. Alongside strong momentum in AI servers, this combined growth in both traditional and AI servers is driving robust demand for DRAM products.

Micron continues to demonstrate solid cash-flow generation, allowing it to strengthen its cash position and reduce debt. In the last reported quarter, the company paid down $900 million in total debt, $700 million from a term loan and roughly $200 million through senior note repurchases. It ended the period with $14.6 billion in total debt and $11.9 billion in cash and investments, supported by low net leverage and long-dated maturities extending to 2033.

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However, Micron operates in a highly competitive memory market, where capacity expansions by rivals could pressure DRAM and NAND pricing. Geopolitical tensions may also steer Chinese customers toward alternative suppliers such as Samsung. While acquisitions can broaden Micron’s portfolio and revenue base, they also bring integration challenges and may shift focus away from organic execution. Additionally, a rising NAND mix, softer memory pricing and slower cost reductions could weigh on profitability.

Price Performance and Valuation for STX & MU

Over the past six months, MU has registered gains of 133%, outperforming STX and the Zacks Computer-Integrated Systems industry’s growth of 123.8% and 59.9% respectively.

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MU looks more attractive than STX from a valuation standpoint. Going by the price/earnings ratio, MU’s shares currently trade at 13.16X forward earnings, lower than 21.79X for STX.

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How Do Zacks Estimates Compare for MU & STX?

The Zacks Consensus Estimate for MU’s earnings for fiscal 2026 has been revised north 5.9% to $17.17 over the past 60 days.

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The Zacks Consensus Estimate for STX’s earnings for fiscal 2026 has been revised north 7.9% to $11.26 over the past 60 days.

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STX or MU: Which is the Smarter Investment Right Now?

Both MU and STX are well-positioned to benefit from the growing data storage market, capturing opportunities across AI, enterprise and consumer storage segments.

Both companies currently sport a Zacks Rank #1 (Strong Buy), making the choice between them challenging. But if you consider it from the valuation perspective, MU appears to be the more attractive option at this time. You can see the complete list of today’s Zacks #1 Rank stocks here.