STX

It has been about a month since the last earnings report for Seagate (STX). Shares have added about 10.7% in that time frame, outperforming the S&P 500. But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Seagate due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts. Seagate reported fourth-quarter fiscal 2026 non-GAAP earnings of $5.71 per share, beating the Zacks Consensus Estimate of $5.10 and exceeding the high end of management’s guidance of $5 per share (+/- 20 cents). The bottom line also expanded a whopping 121% year over year. Non-GAAP revenues of $3.6 billion surpassed the Zacks Consensus Estimate by 3.9%. Revenues were above the midpoint of guidance, increasing 48% year over year. Robust cloud spending and disciplined operational execution boosted the company's performance. Strong AI-driven demand for cloud storage solutions helped Seagate achieve 34% revenue growth in fiscal 2026 to $12.2 billion. With improving demand visibility, the company expects fiscal 2027 revenue growth to outpace that of fiscal 2026. Strong enterprise OEM demand led to double-digit revenue and exabyte shipment growth in the June quarter. Seagate is expanding HAMR production to meet growing cloud and enterprise storage needs. It shipped 218 exabytes, up 34% year over year, with data centers accounting for 89% of total shipments. Data center exabyte shipments increased 43% year over year and 11% sequentially. Global cloud customers constitute the majority of Seagate's data center revenue and exabyte demand. The company is expanding production of HAMR-based drives, initially targeting cloud customers before broadening adoption across enterprise markets. It is investing in manufacturing capacity and technology to support the transition while maintaining stable output as demand shifts to higher-capacity drives. These efforts are expected to support mid-20% annual nearline exabyte growth over the next few years. Beginning first-quarter fiscal 2026, it reports revenues across two key markets — Data Center, encompassing nearline products and systems sold to cloud, enterprise and VIA customers, and Edge IoT, covering consumer and client-focused segments, including network-attached storage. The data center accounted for 81% of total revenues, at $2.9 billion, representing a 17% sequential increase and 57% year-over-year growth. The edge IoT accounted for the remaining 19% of revenues, at $697 million, up 20% year over year and 14% sequentially, aided by ongoing supply constraints and favorable NAND pricing. Non-GAAP gross profit surged to $1.9 billion, more than doubling year over year and 31% sequentially. Non-GAAP gross margin reached a record 52.7%, rising about 570 basis points (bps) quarter over quarter and roughly 1,480 bps year over year. The gains were driven by disciplined pricing and a favorable product mix, with management expecting these trends to continue amid robust demand. Non-GAAP operating expenses were $293 million, up 2% year over year. Non-GAAP operating profit climbed 39% sequentially to $1.6 billion, with a 44.6% operating margin, highlighting strong execution in pricing, supply management and areal density innovation. Non-GAAP adjusted EBITDA totaled $1.7 billion, up 37% quarter over quarter and 142% year over year. As of July 3, 2026, cash and cash equivalents were $1.7 billion compared with $1.2 billion as of April 3. Long-term debt (including the current portion) was $3.6 billion as of July 3, 2026, compared with $3.9 billion as of April 3. Cash flow from operations during the fiscal fourth quarter was $1.3 billion compared with $1.1 billion in the previous quarter. Free cash flow increased 17% sequentially and 163% year over year to $1.1 billion. Seagate expects further cash flow growth in fiscal 2027, supported by strong demand, operational efficiency and disciplined capital spending. June-quarter capital spending totaled $187 million, bringing fiscal 2026 CapEx to 4.7% of revenue, within its target range of 4-6% of revenue. Seagate continues balancing investment with shareholder returns. The company returned approximately $810 million during fiscal 2026 through quarterly dividends and share repurchases. Additionally, Seagate declared another quarterly dividend of 74 cents per share, payable on Oct. 7, 2026, to shareholders of record on Sept. 24. Seagate's BTO model points to sustained demand for high-capacity nearline drives amid rising AI adoption. The company expects continued revenue and margin growth in the September quarter, backed by the Mozaic rollout and disciplined pricing. Management anticipates fiscal first-quarter revenues of $4.1 billion (+/- $100 million). At the midpoint, this indicates a 56% year-over-year improvement. Non-GAAP earnings are expected to be $7.3 per share (+/- 20 cents). For the quarter, non-GAAP operating expenses are expected to be around $300 million. At the midpoint of revenue guidance, non-GAAP operating margin is projected to be roughly 50%. The guidance incorporates expected dilution from Exchangeable Senior Notes due 2028, minimal anticipated impact from tariffs and minimal expected impact from current Middle East geopolitical conflicts. This outlook suggests that management expects cloud spending and AI-driven storage demand to remain healthy. Since the earnings release, investors have witnessed a upward trend in fresh estimates. The consensus estimate has shifted 30.61% due to these changes. At this time, Seagate has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock has a score of F on the value side, putting it in the lowest quintile for value investors. Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Seagate has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months. Seagate belongs to the Zacks Computer - Integrated Systems industry. Another stock from the same industry, IBM (IBM), has gained 1.5% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026. IBM reported revenues of $17.16 billion in the last reported quarter, representing a year-over-year change of +1.1%. EPS of $2.93 for the same period compares with $2.80 a year ago. For the current quarter, IBM is expected to post earnings of $2.90 per share, indicating a change of +9.4% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days. IBM has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Seagate Technology Holdings PLC (STX) : Free Stock Analysis Report International Business Machines Corporation (IBM) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Western Digital Corporation WDC ended fiscal 2026 with a fourth-quarter earnings beat, 44% revenue growth and sharply higher margins. The results give the company a strong starting point for fiscal 2027. The next test is execution. Higher-capacity drives must ramp on schedule if WDC is to translate rising cloud and artificial intelligence storage demand into sustained revenue, margin and earnings growth. Fourth-quarter revenues reached $3.75 billion, up 44% year over year and above the Zacks Consensus Estimate of $3.70 billion. Non-GAAP earnings of $3.56 per share topped the consensus mark of $3.35 and increased 109%. Non-GAAP gross margin expanded 1,310 basis points year over year to 54.4%. A richer mix of higher-capacity drives, favorable pricing and manufacturing discipline helped lift profitability, while blended price per terabyte increased by the high teens. Image Source: Zacks Investment Research For the first quarter of fiscal 2027, management expects revenues of $4.1 billion, plus or minus $100 million. At the midpoint, that represents about 45% year-over-year growth. Western Digital also projects non-GAAP gross margin of 55%-56% and earnings of $4 per share, plus or minus 15 cents. The outlook implies another step up from fourth-quarter profitability if demand and pricing remain favorable. Western Digital began shipping next-generation energy-assisted perpendicular magnetic recording drives with capacities up to 40 terabytes in the fiscal fourth quarter. The company has entered volume production with two customers. Management expects the platform to account for about half of nearline bits by the third quarter of fiscal 2027. Higher capacity per drive should allow WDC to deliver more exabytes without a corresponding increase in unit volumes. The roadmap calls for 44-terabyte heat-assisted magnetic recording products in the first half of calendar 2027 and 50-terabyte products in the second half. Customer qualification and manufacturing execution therefore remain central to the fiscal 2027 setup. UltraSMR adoption is advancing as well. Western Digital expects the technology to represent about 60% of nearline exabyte shipments as fiscal 2027 ends, making the sequencing of multiple product transitions important to capacity and cost gains. Management sees inference, agentic artificial intelligence and physical artificial intelligence as persistent storage drivers because these workloads continuously create and retain data. High-bandwidth drives are also sampling with five customers, potentially extending HDD economics into higher-throughput workloads. The theme is broader than WDC. Seagate Technology Holdings plc STX reported fiscal fourth-quarter 2026 revenues of $3.6 billion as a mass-capacity storage provider, while Sandisk Corporation SNDK said fiscal 2026 Datacenter revenues increased 437%, illustrating demand across different storage technologies. WDC's fiscal 2027 opportunity is substantial, but the product roadmap raises the execution bar. The company must sustain pricing, qualify new platforms and convert higher-capacity drives into the exabyte growth and margin expansion embedded in its outlook. The stock currently carries a Zacks Rank #2 (Buy), along with a Growth Score of A and  Momentum Score of A. Those scores favor growth and momentum characteristics, while the Value Score of F and VGM Score of C point to a less attractive value profile and a mixed combined reading. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Western Digital Corporation (WDC) : Free Stock Analysis Report Seagate Technology Holdings PLC (STX) : Free Stock Analysis Report Sandisk Corporation (SNDK) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Find your next quality investment with Simply Wall St's easy and powerful screener, trusted by over 7 million individual investors worldwide. Seagate Technology Holdings (STX) has drawn fresh investor attention after reporting a strong finish to fiscal 2026, with revenue and profitability ahead of expectations and non GAAP gross margin expanding for the 13th straight quarter. See our latest analysis for Seagate Technology Holdings. The strong fiscal 2026 finish has come alongside powerful momentum in Seagate Technology Holdings’ stock, with a 1 day share price return of 4.91%, a 90 day share price return of 15.83%, and a year to date share price return of 220.43%. Over the past year, the total shareholder return has been very large, and the 3 year total shareholder return is around 14x. These figures point to enthusiasm around AI focused storage demand and improving margins. If Seagate’s AI driven story has caught your attention, it can be useful to see what else is moving in this space, starting with 55 AI infrastructure stocks After such a sharp move, and with Seagate Technology Holdings trading at a discount to both analyst targets and intrinsic value estimates, is the market sensibly cautious about AI storage risks, or is it underestimating what has already changed in the business? At a last close of $921.37 versus a narrative fair value of $1,115.87, Seagate Technology Holdings is framed as undervalued, with that gap attributed to AI driven storage demand and margin expansion assumptions. Read the complete narrative. Want to see what this Mozaic rollout really implies for Seagate Technology Holdings? The narrative focuses on brisk revenue expansion, sharply higher margins and a richer earnings base that underpins that higher fair value. Result: Fair Value of $1,115.87 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, Seagate Technology Holdings still faces meaningful risks, including shifts in AI storage architectures and tighter trade policies that could challenge current demand and pricing assumptions. Find out about the key risks to this Seagate Technology Holdings narrative. There is a different picture when looking at Seagate Technology Holdings through its P/E ratio. The stock trades on 65.6x earnings, which is far above the global tech sector at 21.7x and also above the estimated fair ratio of 58.3x. That points to a full pricing that could limit room for error. If earnings or AI storage demand fall short of expectations, how much multiple risk are you really comfortable with? For a closer look at how this P/E premium compares with both peers and the fair ratio, and how that could change if sentiment cools, See what the numbers say about this price — find out in our valuation breakdown. If this mix of optimism and concern around Seagate Technology Holdings leaves you unsure, consider acting promptly and evaluating the signals yourself while they are fresh. To see the full balance of potential upsides and downside warnings in one place, start with the 3 key rewards and 3 important warning signs If Seagate Technology Holdings has sharpened your focus on opportunities, do not stop here. Broader market ideas can help you balance risk and uncover fresh potential. Use these focused stock lists on the Simply Wall St Screener to spot ideas that match your approach before the current window of opportunities changes again. Target potential mispricing by reviewing 51 high quality undervalued stocks that combine solid fundamentals with room for sentiment to catch up. Strengthen the quality core of your portfolio by screening for companies in the solid balance sheet and fundamentals stocks screener (49 results) that can better handle tough conditions. Hunt for overlooked opportunities by scanning the screener containing 18 high quality undiscovered gems that may sit off most investors’ radars but still have strong underlying numbers. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include STX. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Seagate (STX) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company. The upward trend in estimate revisions for this electronic storage maker reflects growing optimism of analysts on its earnings prospects, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core. The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008. Consensus earnings estimates for the next quarter and full year have moved considerably higher for Seagate, as there has been strong agreement among the covering analysts in raising estimates. The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate: The earnings estimate of $7.03 per share for the current quarter represents a change of +169.4% from the number reported a year ago. Over the last 30 days, the Zacks Consensus Estimate for Seagate has increased 30.7% because three estimates have moved higher compared to no negative revisions. The company is expected to earn $34.99 per share for the full year, which represents a change of +124.6% from the prior-year number. The revisions trend for the current year also appears quite promising for Seagate, with six estimates moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 26.91%. The promising estimate revisions have helped Seagate earn a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision.You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500. While strong estimate revisions for Seagate have attracted decent investments and pushed the stock 6% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Seagate Technology Holdings PLC (STX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

In August 2026, Seagate Technology Holdings reported a strong finish to fiscal 2026 with revenue and profitability exceeding expectations, expanding non-GAAP gross margin for the 13th consecutive quarter and delivering its strongest quarterly free cash flow in over a decade. The company highlighted long-term AI-driven storage demand, secured supply agreements extending beyond 2028, and emphasized its HAMR-based Mozaic platform as a core enabler of planned mid-20% exabyte growth. We’ll now examine how Seagate’s stronger-than-expected fiscal 2026 performance and Mozaic HAMR momentum reshape its AI storage-driven investment narrative. Invest in the nuclear renaissance through our list of 90 elite nuclear energy infrastructure plays powering the global AI revolution. To own Seagate today, you need to believe that AI-driven mass-capacity storage demand and the HAMR-based Mozaic platform can support profitable exabyte growth while offsetting HDD competition from SSDs. The latest fiscal 2026 beat strengthens the near term catalyst around HAMR adoption and AI data center demand, but it does not remove key risks tied to Seagate’s elevated debt load and the pace of any mix shift toward flash. Among recent developments, Seagate’s affirmation of its US$0.74 quarterly dividend alongside record free cash flow is especially relevant. It underlines management’s confidence in cash generation just as Mozaic ramps and long term supply agreements extend beyond 2028, both of which tie directly into the AI storage catalyst that many investors are watching most closely. Yet beneath the strong headline numbers, investors should also be aware of how Seagate’s high debt and volatile HDD demand could interact with... Read the full narrative on Seagate Technology Holdings (it's free!) Seagate Technology Holdings' narrative projects $30.5 billion revenue and $16.3 billion earnings by 2029. This requires 35.8% yearly revenue growth and a roughly $13.1 billion earnings increase from $3.2 billion today. Uncover how Seagate Technology Holdings' forecasts yield a $1116 fair value, a 27% upside to its current price. Some of the most optimistic analysts already expected Seagate’s earnings to climb toward roughly US$16.0 billion by 2029, which contrasts sharply with concerns about an accelerating shift to SSDs, and the latest AI driven upside now raises fair questions about how both bullish and cautious views on future storage mix could change from here. Explore 4 other fair value estimates on Seagate Technology Holdings - why the stock might be worth as much as 36% more than the current price! Don't just follow the ticker - dig into the data and build a conviction that's truly your own. A great starting point for your Seagate Technology Holdings research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision. Our free Seagate Technology Holdings research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Seagate Technology Holdings' overall financial health at a glance. Early movers are already taking notice. See the stocks they're targeting before they've flown the coop: Capitalize on the AI infrastructure supercycle with our selection of the 56 best 'picks and shovels' of the AI gold rush converting record-breaking demand into massive cash flow. Explore 25 top quantum computing companies leading the revolution in next-gen technology and shaping the future with breakthroughs in quantum algorithms, superconducting qubits, and cutting-edge research. Uncover the next big thing with 19 elite penny stocks that balance risk and reward. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include STX. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Freshworks’ Q2 results topped Wall Street’s revenue and non-GAAP profit expectations, fueled by continued momentum in its employee experience (EX) platform and robust adoption of AI-powered solutions. Management highlighted large enterprise wins and strong growth in cross-selling advanced IT asset management and incident response modules. CEO Dennis Woodside credited this performance to the company’s ability to displace legacy providers, with customers like Seagate and American Oncology Network transitioning quickly to Freshworks’ unified service operations platform. Woodside noted, “Speed to value is what Freshworks delivers,” as large customers increasingly seek integrated, easy-to-use solutions. Is now the time to buy FRSH? Find out in our full research report (it’s free). Revenue: $237.4 million vs analyst estimates of $233.6 million (16% year-on-year growth, 1.6% beat) Adjusted EPS: $0.17 vs analyst estimates of $0.13 (30.4% beat) Adjusted Operating Income: $55.93 million vs analyst estimates of $42.13 million (23.6% margin, 32.7% beat) The company slightly lifted its revenue guidance for the full year to $965 million at the midpoint from $961 million Management raised its full-year Adjusted EPS guidance to $0.67 at the midpoint, a 8.1% increase Operating Margin: 2.6%, up from -4.2% in the same quarter last year Customers: 25,356 customers paying more than $5,000 annually Net Revenue Retention Rate: 104%, down from 106% in the previous quarter Annual Recurring Revenue: $971.7 million (16.6% year-on-year growth, beat) Billings: $245.8 million at quarter end, up 15.2% year on year Market Capitalization: $3.13 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Lucas Morison (Canaccord Genuity) asked how Freshworks plans to maintain product simplicity as platform capabilities expand. CEO Dennis Woodside said maintaining ease of use is a core engineering focus, citing unified design and cloud migration efforts. Tamjid Md Moinuddin Chowdhury (Guggenheim Securities) inquired about runway for ITAM and ESM cross-sell in the EX base. Woodside described both as early-stage with significant growth potential, supported by recent cloud-based product launches. Taylor McGinnis (UBS) questioned drivers behind anticipated acceleration in EX ARR growth. CFO Tyler Sloat pointed to a strong pipeline, larger deal sizes, and new product integrations as key factors for confidence in sustained growth. Patrick Schulz (Baird) asked about the importance of ITAM for large enterprise wins and updates on cloud transition. Sloat explained that both on-prem and cloud ITAM are offered, with new cloud capabilities expanding addressable markets. Scott Berg (Needham & Company) probed the impact of partner channel evolution on retention and expansion. Woodside stated that partner involvement has led to higher retention, faster expansion, and improved win rates, especially in larger enterprise accounts. In the coming quarters, key areas to watch include (1) further adoption and monetization of AI Agent Studio and other advanced AI modules, (2) sustained growth and cross-sell momentum in the EX business as ITAM and ESM products penetrate more accounts, and (3) the impact of Freshdesk Omni migration and CX organizational changes on customer retention and profitability. Execution in these areas will be central to Freshworks’ ability to maintain its current growth trajectory. Freshworks currently trades at $11.97, in line with $12.04 just before the earnings. Is there an opportunity in the stock? The answer lies in our full research report (it’s free for active Edge members). ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies. Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.

Western Digital Corporation WDC delivered an impressive $3.5 billion in free cash flow (“FCF”) for fiscal 2026, representing a 27% FCF margin. In the fiscal fourth quarter alone, FCF reached $1.3 billion, translating into a solid 34% margin. This robust performance highlights the company’s ability to convert earnings into cash efficiently, while providing flexibility in capital allocation. WDC’s fiscal 2026 revenues increased 36% to $12.9 billion, driven by strong exabyte shipments and pricing tailwinds. Gross margin expanded 970 basis points (bps) to 49.1% and operating margin improved 1,290 bps to 37.3%. Favorable mix of high-capacity drives, pricing and efficient execution across manufacturing operations cushioned margin performance. Western Digital Corporation free-cash-flow-quarterly | Western Digital Corporation Quote Western Digital also demonstrated a clear commitment to returning value to its shareholders. The company returned $3.1 billion to its shareholders in fiscal 2026. During the fiscal fourth quarter, it repurchased $1 billion of stock and paid $54 million in dividends. The company ended the quarter with $1.6 billion in cash and $1.1 billion in debt, leading to a $500 million net positive cash position at the fiscal year-end. Looking ahead, management noted that it remains confident about the company’s long-term prospects, along with margin and cash flow expansion amid a rapid increase in cloud and other data-intensive workloads. Buoyed by strong demand trends, WDC expects fiscal first-quarter non-GAAP revenues of $4.1 billion (+/- $100 million), up 45% year over year at the midpoint.With strong demand visibility, improving pricing and a technology roadmap spanning 40TB ePMR and upcoming 44TB HAMR products, WDC appears well positioned to sustain robust FCF generation in fiscal 2027. However, cash-flow generation will hinge on the company’s ability to maintain pricing while converting strong demand into margin expansion. It also needs to watch out for intense competition in the space from the likes of Seagate Technology STX and NetApp NTAP, who are also vying for a larger share of the data storage market. Seagate is one of WDC’s closest competitors. Like WDC, STX is also witnessing rapid top-line growth amid the AI boom. Fiscal fourth-quarter non-GAAP revenues of $3.6 billion increased 48% year over year. The data center segment accounted for 81% of total revenues, at $2.9 billion, representing a 17% sequential increase and 57% year-over-year growth. Non-GAAP operating profit climbed 39% sequentially to $1.6 billion, with a 44.6% operating margin.Cash flow from operations during the fiscal fourth quarter was $1.3 billion compared with $1.1 billion in the previous quarter. Free cash flow increased 17% sequentially and 163% year over year to $1.1 billion. Seagate expects sequential cash flow growth in fiscal 2027, supported by strong demand, operational efficiency and disciplined capital spending. NetApp continues to benefit from demand for modern all-flash arrays that support enterprise modernization and AI workloads. The company’s business model continues to generate sizable cash flow that supports investment and capital returns. In the fiscal fourth quarter, operating cash flow was $950 million and free cash flow was $900 million, while fiscal 2026 free cash flow was $1.87 billion. Non-GAAP operating margin for fiscal 2026 was 30.2%, up 190 basis points year over year. The company returned $1.36 billion to shareholders in fiscal 2026 through dividends and repurchases, and increased its share repurchase authorization by $1 billion. Management expects to return up to 100% of free cash flow to its shareholders in fiscal 2027 and to reduce share count by a low single-digit percentage year over year. In the past month, shares have tanked 17.7% compared with the Zacks Computer-Storage Devices industry’s decline of 18.6%. Image Source: Zacks Investment Research In terms of forward price/earnings, WDC’s shares are trading at 21.04X, higher than the industry’s 9.1X. Image Source: Zacks Investment Research The Zacks Consensus Estimate for WDC’s earnings for fiscal 2027 has been revised up roughly 5% to $18.85 over the past 60 days. Image Source: Zacks Investment Research Currently, Western Digital holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Western Digital Corporation (WDC) : Free Stock Analysis Report NetApp, Inc. (NTAP) : Free Stock Analysis Report Seagate Technology Holdings PLC (STX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Seagate Technology Holdings plc STX has delivered dramatic turnarounds in the AI-driven storage space in 2026. The fiscal fourth quarter was a record quarter for profitability and cash flow, driven by strong data center demand, faster HAMR adoption and value-based pricing. The company generated approximately $3.6 billion in revenue, up 49% year over year, while adjusted EPS reached $5.71, representing 120% year-over-year growth. More importantly, Seagate's forward guidance was arguably even more impressive than the quarterly beat. Its BTO model points to sustained demand for high-capacity nearline drives amid rising AI adoption. The company expects continued revenue and margin growth in the September quarter, backed by the Mozaic rollout and disciplined pricing. Management expects first-quarter fiscal 2027 revenue of $4.1 billion, up 56% year over year at the midpoint. STX shares have gained 99.5% in the past six months, outperforming the Zacks Computer-Integrated Systems industry’s growth of 74.7%. The stock has also outperformed the Zacks Computer & Technology sector and the S&P 500’s growth of 18.2% and 11.7%, respectively. Image Source: Zacks Investment Research The company has also outperformed its cut-throat competitors in the storage space, like Western Digital Corporation WDC, Everpure P and NetApp, Inc. NTAP. WDC has gained 58.6%, while P and NTAP have risen 18.4% and 78.9% during the same time frame. After a blockbuster fiscal fourth quarter, the key question for investors is whether STX stock can continue climbing after its enormous rerating. The answer is yes, but the risk-reward is becoming more balanced. Seagate's fundamentals remain unusually strong, yet expectations and valuation have also moved sharply higher. Let’s delve in deeper. AI infrastructure requires enormous amounts of data storage. Training is just one part of the picture. AI inference, data lakes, model development, surveillance, enterprise applications and cloud workloads all produce additional data that needs to be stored. Seagate is well-positioned because its strength is mass-capacity hard disk drives, which are still much more economical than flash storage for many large-scale archival and nearline workloads. Its fiscal fourth-quarter results highlighted strong cloud and AI-driven demand, solid pricing and ongoing supply-demand tightness. Management also highlighted the increasing adoption of its HAMR-based Mozaic technology, enabling it to boost storage capacity without proportionally increasing the physical size of its drives. HAMR could be the next major catalyst. Seagate's Mozaic platform is designed to significantly increase areal density, allowing customers to store more data per drive. HAMR products accounted for about 40% of Seagate’s nearline exabyte shipments by fiscal 2026-end. Mozaic 4, supporting up to 44TB, is ramping with major cloud customers, with HAMR exabytes expected to reach 50% by year-end 2026. Higher-capacity 4TB and 5TB-per-disk products should further increase exabyte output without requiring a proportional increase in drive volumes. Strong cloud, AI and data-reuse trends continue to support mass-capacity storage demand, with cloud data centers now accounting for about 90% of exabyte shipments. Customers are extending planning horizons into 2029 and beyond, providing strong demand visibility. Seagate is maintaining disciplined order management and value-based pricing, supported by tight industry supply and favorable demand. This is expected to support healthy margins and profitable growth. The company targets a mid-20% exabyte CAGR, with growth recently exceeding 30%. Furthermore, data-intensive applications, including video, sensors and enterprise unstructured data, are driving storage demand. Seagate expects application-driven demand to expand over the coming years, with AI still in its early stages but increasingly supporting key-value caching and unstructured data workloads at hyperscalers. Over the longer term, physical AI applications such as robotics and autonomous vehicles could further accelerate data creation and storage needs. Seagate delivered strong margin and cash flow momentum, with non-GAAP gross margin expanding for the 13th consecutive quarter to 52.7% and operating margin reaching 44.6%. Free cash flow rose to $1.12 billion in the fiscal fourth quarter, bringing fiscal 2026 numbers to a record $3.1 billion. At the same time, the company reduced gross debt by $1.4 billion during fiscal 2026 and further retired $1 billion of high-yield notes in July. Continued cash generation, pricing gains and operating leverage should support further deleveraging and provide greater flexibility for dividends, share repurchases and technology investments. The company plans to retire an additional $1.2 billion in debt in September, reducing gross debt to $2.4 billion. Capital expenditures for 2027 are expected to stay within 4-6% of revenue, supporting manufacturing investments. Image Source: Zacks Investment Research However, Seagate faces execution risks from HAMR transitions, including manufacturing complexity, qualification delays and yield issues that could pressure growth and margins. Heavy reliance on large cloud customers also creates concentration risks, while tariffs, trade restrictions, FX and shifts in global tech spending could adversely impact results. Seagate faces tough competition from other players in the data storage industry, including Western Digital, SSD providers and other storage-system vendors, which remains intense. STX is currently witnessing an uptrend in estimate revisions. Earnings estimates for fiscal 2027 have moved up 30.7% to $34.99 over the past 60 days, while the same for fiscal 2028 has gone up 30% to $55.85. Image Source: Zacks Investment Research Going by the price/earnings ratio, the company’s shares currently trade at 21.95 forward earnings, higher than 11.65 for the industry. Image Source: Zacks Investment Research In comparison, the forward 12-month price/earnings multiple for P, NTAP and WDC are 75.41X, 25.68X and 20.73X, respectively. Several potential catalysts could push STX stock even higher, including upward EPS revisions, sustained pricing power, faster HAMR adoption, strong hyperscaler AI spending and robust free cash flow supporting debt reduction and shareholder returns. The recent quarterly results were exceptional, and the forward revenue outlook suggests momentum is continuing into fiscal 2027. If Seagate can maintain pricing power, expand HAMR adoption and convert AI-driven demand into sustained free-cash-flow growth, the stock can still move higher from current levels. Flaunting a Zacks Rank #1 (Strong Buy) currently, STX remains a compelling portfolio addition for investors now. You can see the complete list of today’s Zacks #1 Rank stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Seagate Technology Holdings PLC (STX) : Free Stock Analysis Report NetApp, Inc. (NTAP) : Free Stock Analysis Report Western Digital Corporation (WDC) : Free Stock Analysis Report Everpure, Inc. (P) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Seagate Technology Holdings plc (NASDAQ:STX)'s shares have caught a lot of quarters, including Cramer, by surprise in today's AI-driven era of investing. They are up by 447% over the past year and by 181% year-to-date. The CNBC TV host has discussed Seagate Technology Holdings plc (NASDAQ:STX) several times over the past couple of months. For instance, in May, he commented on the firm's earnings multiple and remarked that it was "too pricey, [at] nearly 50 times next year’s earnings estimates." After Seagate Technology Holdings plc (NASDAQ:STX) reported its fiscal fourth quarter earnings in late July, Cramer praised the results and was exasperated by management's comments during the earnings call: Cramer's remarks about slowing demand are also at the center of the debate raging around Seagate Technology Holdings plc (NASDAQ:STX). The bulls and the bears are torn about whether the booming demand that the firm is experiencing is part of a new trend where it's sustainable or whether it will follow the historically cyclical patterns of the storage industry. The booming demand led Seagate Technology Holdings plc (NASDAQ:STX) to grow its fiscal fourth quarter revenue to $3.6 billion to mark a 48.5% annual growth. Additionally, higher demand also enabled the firm's margins to expand to 52.7%, which was a significant jump over Q4 2025's 37.9%. The strong set of results led the bulls to argue that Seagate Technology Holdings plc (NASDAQ:STX) was experiencing sustainable demand driven by the ongoing AI infrastructure buildout. Yet, the strong share price performance makes the bears anxious. They point out that as Seagate Technology Holdings plc (NASDAQ:STX)'s shares have jumped by triple-digit percentages, the firm's future growth might already be priced into the stock. Additionally, they add that the firm might also have to depend to a large extent on its future Heat-Assisted Magnetic Recording (HAMR) products and the Mozain platform to maintain its market share. While the bulls believe that the high-density drives have enabled margin expansion, the bears caution that should the industry shift towards solid-state drives (SSDs), Seagate Technology Holdings plc (NASDAQ:STX) might experience headwinds. In Q4 2025, 74 out of the 1,041 hedge funds part of Insider Monkey's database had held a stake in Seagate Technology Holdings plc (NASDAQ:STX). In Q1 2026, this figure jumped to 93 out of 1,022 hedge funds. Arrowstreet Capital remained the biggest stakeholder even though its $561 million stake marked a 56% drop. A notable jump came from D E Shaw, which bumped its stake by 62% to $505 million. As for the short sellers, 3.7% of the float was short as of mid-July. While Insider Monkey acknowledges the risk and potential of STX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than STX that has 100x upside potential, check out our report about the cheapest AI stock. READ NEXT: Jim Cramer Draws the Line on NVIDIA in China: Why National Security Comes First and Jim Cramer Defends His Dell Stance as Investors Complain About Missing Out. Disclosure: None.