We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can Structural Growth & Durable Demand Fuel the Next Rally in Seagate?
Read MoreHide Full Article
Key Takeaways
Seagate sees AI-driven storage demand becoming structural amid cloud and enterprise adoption.
STX expects Mozaic 4 HAMR to become its dominant exabyte shipment platform by the end of 2026.
STX targets up to 50TB per drive with Mozaic 5 while improving efficiency and lowering costs.
Seagate Technology Holdings plc (STX - Free Report) has emerged as a key beneficiary of the AI boom, repositioned as a critical enabler of hyperscale AI and cloud storage growth. Seagate reported a strong third-quarter fiscal 2026 performance, fueled by surging demand for mass-capacity storage products from cloud providers and enterprise AI deployments. Per Seagate, AI-driven storage demand is no longer experimental; it is becoming structural.
Management highlighted STX is entering a “new era of structural growth,” fueled by rising AI-driven storage demand, growing adoption of Mozaic products and disciplined execution aimed at boosting margins, cash flow and long-term value. While SSDs lead in high-speed workloads, HDDs remain far more cost-efficient for hyperscale AI data centers. Seagate’s areal-density-focused strategy enables scalable growth with better capital efficiency and lower power usage per terabyte, and supports its mid-20% exabyte growth target. Its Mozaic 4+ HAMR platform delivers up to 44TB per drive —more than 30% higher capacity than prior generations —using advanced laser and photonics technology with minimal material changes.
Following initial shipments in March, Mozaic 4 is expected to become the dominant HAMR exabyte shipment platform by the end of 2026. With millions of HAMR drives already shipped, STX remains focused on meeting customer demand for higher storage capacity. Its next-generation Mozaic 5 platform, targeted for late 2027 qualification, is expected to deliver up to 50TB per drive within existing power and space limits. As HAMR production scales beyond cloud and hyperscale customers into enterprise and edge markets, Seagate expects improved portfolio simplification, lower costs and greater operational efficiency.
While premium valuation and competition risks from Western Digital Corporation (WDC - Free Report) and Micron Technology (MU - Free Report) remain woes, the long-term structural drivers supporting STX appear durable. If AI-driven data growth continues to accelerate, the stock could still have meaningful upside ahead.
How Does STX Stack Up Against Rivals in AI Storage?
WDC is a pure-play HDD company and a key partner to hyperscalers and cloud providers in the AI-driven data era. It is seeing strong momentum across its portfolio, supported by improving visibility into long-term customer demand. As AI shifts from training to large-scale inference, data generation is accelerating rapidly, increasing demand for persistent storage where HDDs remain the primary medium. Agentic AI, synthetic data, robotics and autonomous systems are further expanding data creation and retention needs. These trends are expected to drive long-term storage demand at a rate above 25% CAGR, positioning WDC to benefit through its high-capacity HDD solutions.
MU is benefiting from the AI boom through the rising adoption of its HBM solutions by hyperscalers and enterprise customers. Strong demand for its HBM portfolio is expected to drive significant revenue growth, with the business already generating multi-billion-dollar quarterly revenues. As AI infrastructure spending accelerates, Micron remains well-positioned to benefit from growing demand for advanced memory used in GPU clusters and AI data centers. For fiscal third-quarter 2026, MU expects revenue of $35.5 billion (+/- $750 million), supported by strong memory-chip demand and rising DRAM prices driven by AI server growth and tight supply of advanced DRAM.
STX’s Price Performance, Valuation & Estimates
In the past year, STX shares have skyrocketed 629.5%, outperforming the Computer Integrated Systems industry’s growth of 190.3%.
Image Source: Zacks Investment Research
In terms of forward price/earnings, STX’s shares are trading at 32.9X, higher than the industry’s 15.16X.
Image Source: Zacks Investment Research
STX is currently witnessing an uptrend in estimate revisions. Earnings estimates for fiscal 2026 have increased 15.6% to $14.89 over the past 60 days, while the same for fiscal 2027 has gone up 34.9% to $26.34.
View the Zacks #1 Rank List
Image: Bigstock
Can Structural Growth & Durable Demand Fuel the Next Rally in Seagate?
Key Takeaways
Seagate Technology Holdings plc (STX - Free Report) has emerged as a key beneficiary of the AI boom, repositioned as a critical enabler of hyperscale AI and cloud storage growth. Seagate reported a strong third-quarter fiscal 2026 performance, fueled by surging demand for mass-capacity storage products from cloud providers and enterprise AI deployments. Per Seagate, AI-driven storage demand is no longer experimental; it is becoming structural.
Management highlighted STX is entering a “new era of structural growth,” fueled by rising AI-driven storage demand, growing adoption of Mozaic products and disciplined execution aimed at boosting margins, cash flow and long-term value. While SSDs lead in high-speed workloads, HDDs remain far more cost-efficient for hyperscale AI data centers. Seagate’s areal-density-focused strategy enables scalable growth with better capital efficiency and lower power usage per terabyte, and supports its mid-20% exabyte growth target. Its Mozaic 4+ HAMR platform delivers up to 44TB per drive —more than 30% higher capacity than prior generations —using advanced laser and photonics technology with minimal material changes.
Following initial shipments in March, Mozaic 4 is expected to become the dominant HAMR exabyte shipment platform by the end of 2026. With millions of HAMR drives already shipped, STX remains focused on meeting customer demand for higher storage capacity. Its next-generation Mozaic 5 platform, targeted for late 2027 qualification, is expected to deliver up to 50TB per drive within existing power and space limits. As HAMR production scales beyond cloud and hyperscale customers into enterprise and edge markets, Seagate expects improved portfolio simplification, lower costs and greater operational efficiency.
While premium valuation and competition risks from Western Digital Corporation (WDC - Free Report) and Micron Technology (MU - Free Report) remain woes, the long-term structural drivers supporting STX appear durable. If AI-driven data growth continues to accelerate, the stock could still have meaningful upside ahead.
How Does STX Stack Up Against Rivals in AI Storage?
WDC is a pure-play HDD company and a key partner to hyperscalers and cloud providers in the AI-driven data era. It is seeing strong momentum across its portfolio, supported by improving visibility into long-term customer demand. As AI shifts from training to large-scale inference, data generation is accelerating rapidly, increasing demand for persistent storage where HDDs remain the primary medium. Agentic AI, synthetic data, robotics and autonomous systems are further expanding data creation and retention needs. These trends are expected to drive long-term storage demand at a rate above 25% CAGR, positioning WDC to benefit through its high-capacity HDD solutions.
MU is benefiting from the AI boom through the rising adoption of its HBM solutions by hyperscalers and enterprise customers. Strong demand for its HBM portfolio is expected to drive significant revenue growth, with the business already generating multi-billion-dollar quarterly revenues. As AI infrastructure spending accelerates, Micron remains well-positioned to benefit from growing demand for advanced memory used in GPU clusters and AI data centers. For fiscal third-quarter 2026, MU expects revenue of $35.5 billion (+/- $750 million), supported by strong memory-chip demand and rising DRAM prices driven by AI server growth and tight supply of advanced DRAM.
STX’s Price Performance, Valuation & Estimates
In the past year, STX shares have skyrocketed 629.5%, outperforming the Computer Integrated Systems industry’s growth of 190.3%.
Image Source: Zacks Investment Research
In terms of forward price/earnings, STX’s shares are trading at 32.9X, higher than the industry’s 15.16X.
Image Source: Zacks Investment Research
STX is currently witnessing an uptrend in estimate revisions. Earnings estimates for fiscal 2026 have increased 15.6% to $14.89 over the past 60 days, while the same for fiscal 2027 has gone up 34.9% to $26.34.
Image Source: Zacks Investment Research
STX currently boasts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.