Seagate Technology Holdings plc (STX Quick QuoteSTX - Free Report) is scheduled to report third-quarter fiscal 2026 earnings on April 28, after the closing bell.

The Zacks Consensus Estimate for earnings is pegged at $3.50 per share, indicating an 84.2% year-over-year increase. The Zacks Consensus Estimate for revenues is $2.94 billion, suggesting a 36.3% uptick from the year-ago actual.

For the fiscal third quarter, STX expects revenues of $2.9 billion (+/- $100 million). At the midpoint, this indicates a 34% year-over-year improvement. Non-GAAP earnings are expected to be $3.40 per share (+/-20 cents).

STX’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 8.4%.

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What the Zacks Model Unveils for STX

Our proven model predicts an earnings beat for Seagate this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is exactly the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Seagate has an Earnings ESP of +1.77% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Key Factors to Note for STX Going Into Q3 Earnings

Seagate continues to benefit from a very strong demand environment, especially across data center end markets. Its fiscal third-quarter performance is likely to have been driven by solid, ongoing demand for its high-capacity nearline drives from global cloud data centers, along with steady improvement in the enterprise edge segment, leading to a robust build-to-order pipeline. Seagate has its nearline capacity fully booked through 2026.

Demand visibility is improving, supported by long-term agreements with major cloud customers extending into 2027. Additionally, several cloud clients are already outlining their demand projections for 2028, emphasizing that securing reliable supply remains a top priority. To meet this increasing demand, Seagate plans to remain disciplined on supply, focusing on increasing storage capacity through areal density improvements rather than expanding unit production volumes. Average nearline drive capacity rose 22% year over year in the December quarter to nearly 23TB, with even higher capacities shipped to cloud customers. Revenue per terabyte stayed steady, reflecting effective pricing.

Demand from global cloud customers continues to accelerate, supported by a solid recovery in the enterprise OEM markets. STX expects these positive trends to persist in the quarter under review, with cloud growth outpacing enterprise demand. As AI shifts from model training to large-scale inference, the need for high-capacity storage is rapidly expanding, driven by requirements such as maintaining model accuracy through checkpointing and storing massive datasets that are essential for delivering precise inference results.

Amid tight supply conditions, Seagate is working closely with data center clients to speed up qualification timelines for its high-capacity Mozaic products. Most major global cloud providers are now qualified on Seagate’s HAMR-based Mozaic drives, and production is increasing to meet strong demand. It anticipates that the broader VIA market will grow over time, with the largest growth driven by VIA nearline products in the data center end market. Demand remains robust, especially from global cloud customers. As a result, it expects data center demand to more than offset the usual seasonal slowdown in edge IoT markets during the March quarter.

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It continues to position itself at the forefront of innovation to sustain the AI-driven momentum that has fueled its remarkable rally. In January 2026, Seagate rolled out new edge-to-cloud storage solutions, comprising 32TB HDD across the Exos, SkyHawk AI and IronWolf Pro portfolios. The company demonstrated these mass-capacity storage solutions at Intersec 2026, highlighting its role in supporting AI-driven video analytics and data-intensive applications.  In March, Seagate introduced its Mozaic 4+ platform, a breakthrough storage technology built on HAMR. Mozaic 4+ drives support capacities of up to 44 terabytes, significantly increasing the amount of data that can be stored on a single drive. Its long-term plan aims to reach 10TB per disk, enabling hard drives to approach 100TB in total capacity.  

Non-GAAP gross margin hit a record 42.2% in fiscal second quarter, up about 210 basis points (bps) sequentially and 670 bps year over year, driven by strong demand for high-capacity nearline drives and pricing actions, which also lifted revenue per terabyte—a trend that is expected to have continued into the March quarter. Seagate expects other income and expenses to stay relatively stable in the quarter. For the quarter, non-GAAP operating expenses are expected to be around $290 million. At the midpoint of revenue guidance, non-GAAP operating margin is projected to increase to approximately 30%.

Seagate expects free cash flow to increase further in the March quarter, driven by strong demand, operational efficiency and disciplined capital spending, supporting sustainable long-term cash generation. The company will maintain capital discipline while continuing the transition and ramp-up of HAMR technology, with fiscal 2026 capital spending expected to remain within its target range of 4–6% of revenue. Based on its current outlook, STX expects sequential growth in both revenue and earnings through 2026, while remaining well-positioned to drive long-term value for customers and shareholders.

Despite strong cash flow, Seagate’s high leverage remains a concern, with $1.05 billion in cash versus $4.5 billion in long-term debt and a 90.7% debt-to-capital ratio, well above the industry average currently. While this supports growth, it adds financial risk. However, leverage is improving, with net leverage at 1.1, backed by rising EBITDA. With stronger profitability and cash flow, Seagate expects to further reduce debt and lower leverage.

STX Stock vs. Industry

STX stock has delivered solid gains, climbing 613.6% in the past year, exceeding the Zacks Computer-Integrated Systems industry’s, the Zacks Computer & Technology sector and the S&P 500’s growth of 167.2%, 54.2% and 33.7%, respectively.

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The company has also surpassed its industry peers like Micron Technology (MU Quick QuoteMU - Free Report)  and Advanced Micro Devices (AMD Quick QuoteAMD - Free Report) , which have risen 532.3% and 260.9%, respectively, over the past year. At the same time, its primary competitor in the HDD space, Western Digital Corporation (WDC Quick QuoteWDC - Free Report) , has surged 887.6%.

STX Trades at a Premium

In terms of forward price/earnings, STX’s shares are trading at 32.84X, higher than the industry’s 12.47X.

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WDC, MU and AMD are trading at multiples of 31.62X, 5.92X and 50.57X, respectively.

How to Approach STX Now

Seagate is benefiting from two major trends — the surge in AI-driven data and limited storage supply — which have positioned it as a strong AI infrastructure play. However, the stock is no longer inexpensive, expectations are very high and its margin growth may be nearing a peak rather than just getting started. Ahead of fiscal third-quarter earnings, long-term growth fueled by AI-driven storage demand supports optimism, though high valuation and elevated expectations may weigh on near-term prospects.

The stock appears to be treading in the middle of the road, and new investors could be better off if they trade with caution.