Group 1 - Morgan Stanley raised target prices for several companies, including Apple, emphasizing the outlook for the North American IT hardware industry until 2026 [1] - The hardware sector is expected to see a net profit growth of 17% over the next 12 months, with a historical high valuation rebound of nearly 6 times since April [1] - Analysts predict a 52% outperformance of the hardware sector compared to the market in 2025, although this is lower than the early cycle average of 83% [1] Group 2 - Structural opportunities remain in 2026, with Western Digital, Seagate Technology, Apple, TD Synnex, and Teradata identified as core overweight stocks [2] - Concerns are raised regarding Dell Technologies and HP due to significant exposure to memory chip risks, which may lead to increased product prices and pressure on hardware procurement budgets [2] - Target prices for several companies were adjusted, with Apple raised from $305 to $315, Seagate from $270 to $337, Western Digital from $188 to $228, and Teradata from $30 to $35 [2]

Seagate (STX) stock is yet another AI tailwinds-driven winner that has outperformed with returns of 225% for the year. While the rally has been significant, forward valuations remain attractive considering the growth outlook. The good news continues to flow with the recent announcement that STX stock will be added to the Nasdaq-100 Index after the annual reconstitution. This is likely to translate into buying activity, as funds tracking the Nasdaq-100 Index will also realign their portfolios. More News ...

Micron and Seagate logos stand out against a data center backdrop. Key Points As 2025 winds down, the tech sector is leading the S&P 500 sectors and the AI race continues. Shares of semiconductor maker Micron are up nearly 166% this year, while shares of Seagate Technology have surged nearly 233%. But after a year of stellar returns, analysts are issuing caution about the potential performance of those stocks in the year ahead. Interested in Micron Technology, Inc.? Here are five stocks we like better ...

Industry Overview - The computer storage devices industry is expected to benefit from growth in cloud computing, IoT, connected devices, virtual reality, and AI, leading to increased demand for robust data storage solutions [1] - Companies are leveraging AI for IT Operations (AIOps) and machine learning to optimize storage solutions, while virtualization technologies are being used to streamline data storage [2] Company Insights Western Digital Corp. (WDC) - WDC has seen strong performance driven by cloud and AI demand, with cloud end market revenue increasing by 31% in the last quarter, accounting for 89% of total revenue [6] - The company has doubled shipments of ePMR products and is set to ramp up HAMR drives by the first half of 2027 [6] - WDC anticipates a client refresh cycle due to generative AI, boosting storage demand across various consumer electronics [7] - Expected revenue for fiscal Q2 2026 is $2.9 billion, a 20% increase, driven by data center demand [9] - Current revenue and earnings growth rates are projected at -12.1% and 54.8%, respectively, for the current year [10] Teradata Corp. (TDC) - TDC is expected to benefit from improved ARR growth, cost savings, and productivity measures, which will enhance free cash flow [11] - The company is well-positioned to manage enterprise data for AI systems, with innovative products like QueryGrid and ClearScape Analytics driving growth [12][14] - Recent acquisitions, such as Stemma, enhance TDC's analytics capabilities [13] - Expected revenue and earnings growth rates for next year are -0.6% and 3.3%, respectively [14] Seagate Technology Holdings plc (STX) - STX is experiencing strong demand from the cloud and high-capacity HAMR drive adoption, with significant revenue generated from data centers [15] - The company has its high-capacity nearline production booked through 2026, with revenue projections of $2.7 billion for fiscal Q2 2026, a 16% year-over-year increase [16][19] - Advancements in aerial density are a key strength for STX, providing a competitive advantage in the hard drive industry [17] - STX has formed an alliance with Acronis to offer secure storage solutions for AI-driven data growth [18]

Core Insights - Seagate Technology Holdings plc's shares have increased by 118.3% over the past six months, significantly outperforming the Zacks Computer-Integrated Systems industry's growth of 48.4% and the S&P 500's growth of 16.7% [1][8]. Financial Performance - The company reported better-than-expected results, driven by aggressive capital returns and advancements in hard-disk technology [2]. - Seagate's latest quarterly results showed healthy revenues and strong EPS, with management guiding continued demand for high-capacity drives in data centers [5]. - For fiscal Q2, revenues are expected to be $2.7 billion, indicating a 16% year-over-year improvement [15]. Market Position - Seagate has outperformed industry peers like Micron Technology and Advanced Micro Devices, which have seen stock increases of 97.4% and 63.4%, respectively, over the same period [3]. - The company is positioned well for long-term growth due to its business transformation and strong product pipeline, focusing on Data Center and Edge IoT markets [12]. Technological Advancements - Seagate has introduced new Exos JBOD systems designed for data-heavy workloads, offering up to 3.2 petabytes of capacity [2]. - The company is advancing its HAMR (Heat-Assisted Magnetic Recording) technology, with expectations for HAMR drives to capture a 50% exabyte share by the second half of 2026 [11]. Demand Drivers - Strong demand from global cloud customers and accelerating AI workloads are driving data center revenues, which now represent the majority of sales [5][10]. - The shift towards AI is increasing the economic value of data and storage, leading to higher demand for Seagate's high-capacity nearline drives [10]. Capital Returns and Shareholder Value - Seagate has returned capital to shareholders through dividends of $153 million and share repurchases of 153,000 shares for $29 million [14]. - The company aims to return a minimum of 75% of its free cash flow to shareholders over the long term [14]. Estimate Revisions - Earnings estimates for fiscal 2026 have increased by 7% to $11.26, while estimates for fiscal 2027 have risen by 8.6% to $14.88 [19]. Valuation Metrics - The company's shares currently trade at a price/earnings ratio of 23.34 for forward earnings, compared to 22.12 for the industry [20]. Growth Drivers - Seagate is supported by multi-year growth drivers, including rapid AI-led data expansion and increasing cloud storage requirements, positioning the company for both near-term momentum and long-term value creation [21].

Core Viewpoint - Seagate Technology (STX.US) shares rose over 2% to $293.27 following a report from Morgan Stanley reaffirming an "overweight" rating, predicting continued strong demand for hard disk drives (HDD) until 2027 [1] Group 1: Company Insights - Morgan Stanley's U.S. Technology Hardware Equity Research Head, Erik Woodring, led a team that met with Seagate's CFO, Gianluca Romano, who indicated that the company expects HDD sales gross margins to exceed 50% in the next 12 months [1]

Core Viewpoint - Seagate Technology (STX.US) shares rose over 2% to $293.27 following a report from Morgan Stanley, which reiterated an "overweight" rating and projected continued demand for mechanical hard drives until 2027 [1] Group 1: Company Insights - Morgan Stanley's U.S. Technology Hardware Equity Research team, led by Erik Woodring, held discussions with Seagate's CFO, Gianluca Romano, who indicated that the company expects its mechanical hard drive (HDD) sales gross margin to exceed 50% within the next 12 months [1]

Core Insights - Seagate Technology Holdings plc (STX) is prioritizing shareholder returns in fiscal 2026, driven by improved operating performance and cash flow visibility [1][10] Financial Performance - In Q1 of fiscal 2026, Seagate paid $153 million in dividends and repurchased shares worth $29 million, with a 3% increase in quarterly dividends to 74 cents per share announced in October 2025 [2][10] - Non-GAAP gross margin reached a record 40.1%, increasing by approximately 220 basis points quarter over quarter and about 680 basis points year over year, attributed to the adoption of high-capacity nearline products and pricing strategies [3][10] - Cash flow from operations was $532 million, up from $508 million in the previous quarter, while free cash flow remained stable at $427 million [5][10] Capital Structure and Strategy - Seagate ended the quarter with $2.4 billion in liquidity, including an undrawn revolving credit facility of $1.3 billion, and reduced net leverage to 1.5x adjusted EBITDA, supported by a 67% year-over-year increase in adjusted EBITDA [6][10] - The company aims to return at least 75% of free cash flow to shareholders over time, indicating a strong commitment to capital returns [2][10] Market Position and Competitors - Seagate's business model adjustments and robust product pipeline are expected to enhance profitability and cash flow in fiscal 2026, allowing for a balance between growth and capital returns [7][10] - Competitors like Western Digital Corporation (WDC) and NetApp (NTAP) are also focusing on shareholder returns, with WDC repurchasing shares for $553 million and increasing dividends, while NTAP returned $353 million to shareholders in Q2 of fiscal 2026 [8][12] Stock Performance and Valuation - STX shares have increased by 9.3% over the past month, contrasting with a 2.6% decline in the Zacks Computer Integrated Systems industry [13][10] - The forward price/earnings ratio for STX is 22.08X, slightly above the industry average of 21.66X [14][10] - The Zacks Consensus Estimate for STX's earnings for fiscal 2026 has been revised up by 7% to $11.26 over the past 60 days [15][10]

Group 1: Market Movements - Baoji Pharmaceutical-B (02659) surged over 3.2% amid its debut on the Hong Kong Stock Exchange, closing up 138.82% on its first day, with a market capitalization exceeding HKD 20 billion [1] - New Energy (01799) and Xinyi Solar (00968) saw declines of 3.01% and 3.67% respectively, as the photovoltaic sector faced weakness, with rumors of a 30 billion yuan investment for capacity storage by major companies [1] - Xpeng Motors-W (09868) and Li Auto-W (02015) dropped 4.88% and 2.67% respectively, following data from the China Association of Automobile Manufacturers indicating a month-on-month increase in production and sales [1] Group 2: Company-Specific News - Bolek Vision Cloud-B (02592) experienced a significant drop of nearly 15%, having previously doubled in price over 10 trading days, as it announced a new drug trial application to the FDA [2] - Hu Shang Ayi (02589) rose nearly 6% as Nayuki Tea expanded into the U.S. market, enhancing the international presence of Chinese tea brands [2] - Gold stocks fell sharply, with Zijin Mining (02899) and Shandong Gold (01787) declining by 4.29% and 4.94% respectively, following a report on the Bloomberg Commodity Index's upcoming rebalancing [2] Group 3: Cryptocurrency and Technology - Cryptocurrency ETFs faced significant declines, with notable drops in Bitcoin and Ethereum-related funds, as Bitcoin fell 3.3% from its record high, reflecting market pressures amid weak liquidity [3] - Oracle (ORCL.US) continued its downward trend, dropping 2.66% due to delays in delivering AI data centers for OpenAI, attributed to labor and material shortages [6] - Nvidia (NVDA.US) saw a slight increase of 0.73% after announcing the release of its third-generation language model, aimed at writing and programming tasks [6]

Core Viewpoint - Morgan Stanley reiterates "Overweight" rating for Seagate Technology (STX.US) with a target price of $270 and a bull case target price of $341, citing strong cycles and expected HDD sales to enjoy over 50% gross margins in the next 12 months [1] Group 1: Financial Projections - Analysts led by Erik Woodring predict revenue growth, profit margins, and earnings per share are trending towards or exceeding current bull case forecasts, estimating FY2027 earnings per share at approximately $17, compared to Morgan Stanley's base estimate of $15.40 and market consensus of $14.67, supporting the bullish target price of $341 [1] - The CFO of Seagate, Gianluca Romano, indicated that HDD demand is tracking significantly faster than the 25% annual growth in HDD storage capacity (exabytes) driven by Seagate, with estimates potentially reaching around 40% [1] Group 2: Market Dynamics - The HDD market is expected to remain in a supply-demand imbalance throughout the 2027 calendar year, even as the industry begins to certify new, higher-capacity drives in the first half of 2026 [1] - The quality of HDD demand is noted to be close to "real" demand, minimizing risks of inventory buildup or excessive ordering that could jeopardize the cycle [1] - Apart from Western Digital (WDC.US), Seagate faces minimal competition in the hard disk drive technology sector [1]