This Top S&P 500 AI Stock Is Even Beating Palantir in 2025. Should You Buy It Here?

Core Viewpoint - Seagate Technology (STX) has emerged as the top performer in the S&P 500 with a 196% year-to-date increase, surpassing Palantir's 143% surge, driven by the growing demand for data storage in AI infrastructure [1][2]. Company Performance - Seagate's sales for fiscal 2025 reached $9.1 billion, marking a 39% year-over-year increase, while gross margins expanded from 23% to 35% due to supply constraints enhancing pricing power [4]. - Adjusted earnings per share grew by 527% year-over-year to $8.10, indicating strong financial performance [4]. Market Dynamics - The data center storage market is projected to nearly double from $13 billion in 2024 to $23 billion by 2028, with build-to-order pipelines already booked through mid-2026 [4]. - Seagate shipped 137 exabytes of storage capacity to data centers last quarter, reflecting a 52% year-over-year increase [3]. Technological Advancements - Seagate's competitive advantage lies in its heat-assisted magnetic recording technology, branded as Mozaic, which allows for higher data density and lower energy consumption [5]. - The Mozaic 3 platform has been qualified by three major cloud services, with the Mozaic 4 expected to enter volume production in early 2026 [6]. Analyst Sentiment - Morgan Stanley raised its price target for STX stock from $168 to $265, anticipating an extended demand cycle that could push gross margins above 45% by early 2027 [7].