Seagate(US:STX) ZACKS·2026-02-16 13:55Core Insights - Seagate Technology Holdings plc (STX) has seen a significant stock increase of 30.6% in the past month, outperforming the Zacks Computer-Integrated Systems industry, the Zacks Computer & Technology sector, and the S&P 500, which fell by 0.7%, 4%, and 1.9% respectively [2][9] - The company has outperformed competitors such as Micron Technology (MU) and Silicon Motion Technology (SIMO), which rose by 13.5% and 20.8% respectively, as well as Western Digital Corporation (WDC), which increased by 27.1% [3] Key Catalysts Fueling Growth - The growth of Seagate is driven by booming data storage demand, strong earnings, and margins, particularly in data center markets [5] - Fiscal second-quarter revenues reached $2.83 billion, marking a 22% year-over-year increase, with record margins of 42.2% attributed to high-capacity nearline demand [9][11] - Seagate's strategy focuses on balancing performance with cost efficiency, aligning with the long-term growth of AI-generated data, which is expected to sustain demand [6] Product and Technology Developments - Seagate's HAMR (Heat-Assisted Magnetic Recording) technology is seen as a key enabler for AI and machine learning-driven demand for cost-efficient mass-capacity storage [7] - The Mozaic 3 HAMR drives are now qualified with major U.S. cloud providers, with global qualification expected by the first half of 2026 [7] - Quarterly HAMR shipments have exceeded 1.5 million units, supporting a roadmap toward achieving 10TB-per-disk areal density [7] Financial Performance and Projections - Data center revenue rose by 28% year-over-year to $2.2 billion, constituting 79% of total sales, driven by cloud demand and a recovering enterprise OEM market [13] - The edge IoT segment generated $601 million, accounting for 21% of revenue, with a 2% year-over-year increase [14] - For the fiscal third quarter, Seagate expects revenues of approximately $2.9 billion, indicating a 34% year-over-year improvement [14] Estimate Revisions and Valuation - Earnings estimates for fiscal 2026 have increased by 11.8% to $12.63, while estimates for fiscal 2027 have risen by 29.7% to $18.89 [18] - The company's shares currently trade at a price/earnings ratio of 26.97 for forward earnings, compared to 16.66 for the industry [19] Investment Considerations - Seagate's recent stock rally reflects strong earnings momentum and growing investor confidence in data storage, particularly in AI infrastructure [20][21] - The company is positioned to create long-term value for customers and shareholders, with expectations of sequential revenue and profit growth through 2026 [15]