Earnings Preview: What to Expect From Seagate Technology's Report

Core Viewpoint - Seagate Technology Holdings plc (STX) is poised to report strong earnings growth driven by increasing demand for data storage solutions, particularly in the context of data center expansion and AI-related needs [1][5]. Financial Performance - Analysts anticipate STX will report a profit of $2.55 per share for the fiscal second quarter of 2026, reflecting a 40.1% increase from $1.82 per share in the same quarter last year [2]. - For the full fiscal year, EPS is expected to reach $10.40, a 43.3% increase from $7.26 in fiscal 2025, with further growth projected to $14.37 in fiscal 2027, representing a 38.2% year-over-year rise [3]. Stock Performance - STX shares have significantly outperformed the S&P 500 Index, rising 238.5% over the past 52 weeks compared to the index's 16.5% gain [4]. - The stock has also outperformed the Technology Select Sector SPDR Fund, which gained 24.4% during the same period [4]. Market Drivers - The strong performance of STX is attributed to surging demand for storage solutions, driven by data center expansions and investments in generative AI by cloud providers, as well as the massive data requirements associated with AI [5]. - Hard disk drives (HDDs) are positioned as a cost-effective option for "cool" data storage, allowing Seagate to capitalize on the growing data creation and AI-related demand [5]. Recent Results and Expectations - In its Q1 results, STX reported an adjusted EPS of $2.61, surpassing Wall Street's expectations of $2.36, with revenue of $2.6 billion exceeding the forecast of $2.5 billion [6]. - For Q2, STX expects adjusted EPS to range from $2.55 to $2.95 and revenue between $2.6 billion and $2.8 billion [6]. Analyst Ratings - The consensus opinion on STX stock is bullish, with a "Strong Buy" rating from 18 out of 24 analysts, while one suggests a "Moderate Buy," four give a "Hold," and one recommends a "Strong Sell" [7]. - The average analyst price target for STX is $297.05, indicating a marginal potential upside from current levels [7].