Seagate (STX) Up 2.5% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Seagate's recent earnings report indicates strong performance, with significant growth in revenue and earnings, driven by high demand for high-capacity storage solutions, particularly from global cloud service providers [2][3][6]. Financial Performance - Seagate reported Q1 fiscal 2026 non-GAAP earnings of $2.61 per share, exceeding estimates by 10.6% and management's guidance [2]. - Non-GAAP revenues reached $2.63 billion, surpassing estimates by 3.9% and reflecting a 21% year-over-year increase [3]. - Non-GAAP gross margin hit a record 40.1%, up 220 basis points quarter-over-quarter and 680 basis points year-over-year [9]. Market Segmentation - The data center segment accounted for 80% of total revenue at $2.1 billion, showing a 34% year-over-year growth [6]. - The Edge IoT segment generated $515 million, representing a decline of 12% year-over-year, but seasonal improvements are expected [7]. Product Demand and Shipments - Seagate shipped 182 exabytes of HDD storage, a 32% increase year-over-year, with 159 exabytes going to data center customers [8]. - The company is ramping up shipments of its Mozaic HAMR products, which are now qualified by five major cloud providers [4]. Future Outlook - Management anticipates continued strong demand, projecting revenues of $2.7 billion for the fiscal second quarter, indicating a 16% year-over-year improvement [13]. - Non-GAAP earnings for the next quarter are expected to be $2.75 per share [13]. Shareholder Returns - The company returned $153 million to shareholders through dividends and repurchased 153,000 shares for $29 million [12]. - Seagate aims to return a minimum of 75% of its free cash flow to shareholders over the long term [12].