Seagate Technology is set to report its fiscal fourth-quarter results on Thursday, with investors closely watching whether robust artificial intelligence (AI) spending can continue to drive demand for the company’s high-capacity hard disk drives and support its lofty valuation.
Wall Street expects the data storage company to post earnings of $5.09 per share on revenue of $3.48 billion, representing sequential increases of 24% and 12%, respectively, from the previous quarter. Analysts have also become more optimistic ahead of the results, lifting earnings estimates by 0.59% over the past 60 days.
The earnings release comes after a remarkable rally in Seagate’s shares, which have climbed more than sixfold from their 52-week low as investors bet on surging demand for AI infrastructure and cloud storage.
A key focus for investors will be management’s outlook for heat-assisted magnetic recording (HAMR) technology, which enables the production of ultra-high-capacity hard drives required by hyperscale cloud providers to store the growing volumes of AI-generated data. Seagate’s long-term roadmap targets storage capacities of 100 terabytes and beyond, reinforcing the role of hard disk drives in large-scale data centres.
Investors will also assess progress towards the company’s target of achieving a 40% gross margin, as Seagate continues to shift its product mix towards higher-value nearline enterprise drives. Strong demand from cloud customers has been a major contributor to recent margin expansion and revenue growth.
Analysts remain overwhelmingly positive on the stock despite its strong performance. Of the 25 analysts covering Seagate, 22 recommend buying the shares, with the average price target standing at $992.74, suggesting about 13% upside from current levels.
Several brokerages have recently strengthened their bullish stance. Wells Fargo upgraded Seagate to “Buy” from “Hold” on 10 July, assigning a price target of $1,100, while Melius initiated coverage on 29 June with a “Buy” rating and a $1,600 target.
However, Seagate’s rapid share price appreciation has also raised valuation concerns. The company currently trades at 83.57 times trailing earnings, significantly above historical levels for a cyclical hardware manufacturer.
The stock has also come under pressure alongside broader AI and memory-related shares following weaker-than-expected guidance from SK Hynix, although analysts continue to express confidence in Seagate’s longer-term growth prospects.
When Seagate last reported quarterly earnings in April, it exceeded market expectations with earnings of $4.10 per share, comfortably ahead of the $3.48 consensus forecast. Revenue reached $3.11 billion, beating estimates by 5.4%, supported by stronger demand for nearline storage products from hyperscale cloud customers.
Thursday’s earnings report is expected to provide a crucial test of whether AI-driven investment in data centre infrastructure remains strong enough to sustain Seagate’s growth trajectory and premium valuation, while offering greater visibility on demand, margins and the commercial rollout of its HAMR technology.
