Market Overview - U.S. stock futures rose on Wednesday following a mixed close on Tuesday, with major benchmark indices showing higher futures [1] - The CME Group's FedWatch tool indicates a 97.2% likelihood of the Federal Reserve keeping interest rates unchanged in January [2] - The 10-year Treasury bond yielded 4.24%, while the two-year bond was at 3.57% [2] Index Performance - Dow Jones increased by 0.04%, S&P 500 by 0.30%, Nasdaq 100 by 0.74%, and Russell 2000 by 0.40% in premarket trading [2] - The SPDR S&P 500 ETF Trust (NYSE:SPY) was up 0.33% at $697.77, and Invesco QQQ Trust ETF (NASDAQ:QQQ) advanced 0.77% to $635.96 [2] Stocks in Focus - Starbucks Corp. (NASDAQ:SBUX) was down 0.76% in premarket, projected to post quarterly earnings of $0.59 per share on revenue of $9.73 billion [4] - Microsoft Corp. (NASDAQ:MSFT) rose 0.087% ahead of earnings expected to be $3.97 per share on revenue of $80.27 billion [4] - Tesla Inc. (NASDAQ:TSLA) advanced 0.23%, projected to post quarterly earnings of $0.45 per share on revenue of $24.78 billion [4] - Seagate Technology Holdings PLC (NASDAQ:STX) jumped 10.02% after reporting better-than-expected revenue and earnings, along with strong guidance [4] Economic Insights - Jeffrey Roach, Chief Economist at LPL Financial, forecasts a resilient U.S. economy in 2026, with real economic growth projected at 2.5% year-over-year and nominal growth surpassing 5% [8] - Roach emphasizes that productivity growth, particularly from early AI adoption, will support economic expansion without reigniting inflation [8] - His team maintains a "tactical neutral stance on equities," favoring large-cap growth stocks and the communication services sector [9] Upcoming Economic Data - The FOMC will announce its interest-rate decision at 2:00 p.m., followed by a press conference from Fed Chair Powell at 2:30 p.m. ET [10] Commodities and Global Markets - Crude oil futures were down 0.22% to around $62.25 per barrel, while Gold Spot rose 1.75% to approximately $5,272.90 per ounce [11] - Bitcoin (CRYPTO: BTC) was trading 1.52% higher at $89,223.76 per coin [13]

Core Insights - Seagate Technology Holdings Plc. is a key player in the data storage industry, focusing on innovative storage solutions and benefiting from the increasing demand for data centers and AI applications [1] Financial Performance - Seagate reported earnings per share (EPS) of $3.11, exceeding the estimated $2.78 and the Zacks Consensus Estimate of $2.83, marking a positive surprise of over 10% [2][6] - The company's revenue for the quarter was approximately $2.83 billion, surpassing the estimated $2.73 billion and showing growth from $2.33 billion reported in the same period last year [3][6] - Over the past four quarters, Seagate has consistently outperformed consensus earnings and revenue estimates, indicating strong financial growth [3] Operational Highlights - The strong results are attributed to operational execution and sustained demand for data centers, with CEO Dave Mosley noting the success of HAMR-based Mozaic products as a key factor [4] - Despite the positive earnings report, Seagate's shares remained mostly flat in extended trading, although the company provided strong guidance for the upcoming third quarter [4] Financial Metrics - The P/E ratio of approximately 46.23 indicates investor confidence, while the price-to-sales ratio of about 8.31 reflects its market value relative to revenue [5] - The negative debt-to-equity ratio of -79.27 suggests a higher level of debt compared to equity, which is a consideration for investors [5][6]

Market Overview - The S&P 500 closed at a record high, up about 28 points or 0.4%, while the Nasdaq increased by approximately 0.9%. The Dow Jones Industrial Average saw a decline of about 0.8% [7] - Nine sectors in the S&P 500 were in the green, with big tech stocks performing well, up by about 1.4%. The healthcare sector, however, faced a decline of about 1.7% [8] Texas Instruments Earnings - Texas Instruments reported a fourth-quarter EPS of $1.27, missing the Street's estimate of $1.30, and showing a year-over-year decline [10] - Revenue grew by about 10% to $4.42 billion, in line with estimates, with 14% growth in the analog business and 8% growth in embedded processing [11] - The company invested $3.9 billion in R&D and $4.6 billion in CapEx over the past 12 months, returning $6.5 billion to owners [13] Seagate Earnings - Seagate's second-quarter revenue was reported at $3 billion, slightly above estimates of $2.75 billion, with adjusted EPS of $3.11, beating the estimate of $2.83 [20] - Despite positive revenue and EPS results, the stock declined by 3.2% in after-hours trading, likely due to forecast concerns [21] Healthcare Sector Impact - Medicare Advantage payment rates are set to rise by only 0.09% next year, surprising the market and negatively impacting healthcare stocks [9] - UnitedHealthcare, CVS, and Humana saw significant declines, with UnitedHealth down 19.6%, CVS down 14%, and Humana down over 21% [22] Other Notable Stocks - Corning's stock rose by about 16% after announcing a multiyear agreement worth up to $6 billion with Meta for optical fiber and connectivity solutions [17] - HCA Healthcare shares increased by about 7% after better-than-expected guidance eased investor concerns regarding expiring Affordable Care Act subsidies [19] - JetBlue reported a wider loss than expected, leading to a 6.9% decline in its shares [23] - Pinterest announced layoffs of less than 15% of its workforce, resulting in a 9.6% drop in its stock [24]

Financial Data and Key Metrics Changes - Seagate reported December quarter revenue of $2.83 billion, representing a 7% sequential increase and a 22% year-over-year increase [15] - Non-GAAP gross margin improved to 42.2%, up 210 basis points sequentially, while non-GAAP operating margin expanded by 290 basis points to 31.9% [15][19] - Non-GAAP EPS was $3.11, reflecting a 19% increase quarter-over-quarter [15][20] Business Line Data and Key Metrics Changes - The data center market accounted for 87% of shipment volume, with 165 exabytes shipped, up 4% sequentially and 31% year-over-year [16] - Average cloud nearline drive capacities increased to nearly 26 terabytes in the December quarter, with a strong demand for higher capacity drives [17] - The edge IoT market contributed $601 million, supported by seasonal improvements in consumer products [17] Market Data and Key Metrics Changes - Demand for high-capacity nearline drives in global cloud data centers continued to grow, with nearline capacity fully allocated through calendar year 2026 [7] - The average nearline drive capacity rose by 22% year-over-year, approaching 23 TB per drive [8] - Video applications are driving significant demand, with platforms like YouTube seeing 20 million video uploads daily, up from 2 million three years ago [8] Company Strategy and Development Direction - Seagate's HAMR technology roadmap is positioned to meet growing demand and improve total cost of ownership (TCO) for customers [12][14] - The company aims to maintain supply discipline while satisfying exabyte growth through advancements in areal density without increasing unit production volume [7] - Seagate is focused on expanding profitability through a higher capacity product mix, supported by strong demand from AI applications [13][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand environment, particularly from global cloud customers, and expects data center demand to offset typical seasonality [22][23] - The company anticipates revenue for the March quarter to be in the range of $2.9 billion ±$100 million, representing a 34% year-over-year improvement [23] - Management highlighted the importance of maintaining pricing discipline and the potential for flat to slightly increased pricing in the future [28][71] Other Important Information - Seagate generated over $600 million in free cash flow, the highest level in eight years, and retired $500 million in gross debt [15][21] - The company expects to continue improving profitability and cash generation throughout calendar 2026 [24] - Seagate's net leverage ratio improved to 1.1 times, with expectations for further reduction as profitability increases [22] Q&A Session Summary Question: Can you provide more detail on gross margins going forward? - Management indicated that pricing will be dictated by demand, with potential for flat to slightly up pricing as capacity increases [28] Question: How do you see the pricing dynamics evolving? - Management noted that demand remains strong, and discussions with customers are focused on future planning [35] Question: What is the expected growth rate for exabyte shipments in 2026? - Management did not provide specific guidance for 2026 but indicated a mid-20% growth expectation for nearline exabytes [60] Question: How is the transition to HAMR technology progressing? - The transition is on track, with six out of eight major cloud service providers qualified for HAMR products [48] Question: What portion of your LTAs has fixed pricing agreements? - Management confirmed that for 2026, volume and pricing are well defined, but pricing for 2027 has not yet been fixed [96]

Financial Data and Key Metrics Changes - Seagate reported December quarter revenue of $2.83 billion, up 7% sequentially and 22% year-over-year, setting new records for profitability metrics [15][24] - Non-GAAP gross margin increased to 42.2%, up 210 basis points sequentially, while non-GAAP operating margin expanded by 290 basis points to 31.9% [15][19] - Non-GAAP EPS was $3.11, reflecting a 19% increase quarter-over-quarter [15][20] Business Line Data and Key Metrics Changes - The data center market accounted for 87% of shipment volume, with 165 exabytes shipped, up 4% sequentially and 31% year-over-year [16] - Average cloud nearline drive capacities rose to nearly 26 TB in the December quarter, indicating a shift towards higher capacity drives [17] - The edge IoT market contributed $601 million, supported by seasonal improvements in consumer products [17] Market Data and Key Metrics Changes - Demand for high-capacity nearline drives in global cloud data centers continued to grow, with nearline capacity fully allocated through calendar year 2026 [7][16] - Video applications are driving significant demand, with platforms like YouTube seeing 20 million video uploads daily, up from 2 million three years ago [8] - The strategic value of data is increasing, particularly with the rise of AI applications that require large volumes of historic data [9] Company Strategy and Development Direction - Seagate's HAMR technology roadmap is positioned to meet growing demand and improve total cost of ownership (TCO) for customers [12][14] - The company aims to maintain supply discipline while satisfying exabyte growth through advancements in areal density without increasing unit production volume [7][12] - Seagate is focused on expanding profitability through a higher capacity product mix, supported by strong demand from AI applications [13][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand environment, particularly from global cloud customers, and expects data center demand to offset typical seasonality [22][23] - The company anticipates continued sequential improvement in revenue and profitability throughout calendar 2026 [24] - Management highlighted the importance of maintaining predictable supply and pricing strategies as they transition to higher capacity products [28][70] Other Important Information - Seagate generated over $600 million in free cash flow, the highest level in eight years, and retired $500 million in gross debt [15][21] - The company expects capital expenditures for fiscal year 2026 to remain within the target range of 4%-6% of revenue [21][102] - Cash and cash equivalents totaled just over $1 billion, with ample liquidity of $2.3 billion [21] Q&A Session Summary Question: Can you provide more detail on gross margins going forward? - Management indicated that pricing will be dictated by demand, with potential for flat to slightly up pricing as capacity increases [28][29] Question: How do you see the pricing dynamics evolving? - Management noted that strong demand is leading to better discussions with customers about future pricing, with expectations for flat to slightly up pricing [34][70] Question: What is the expected growth rate for exabyte shipments in 2026? - Management did not provide specific guidance for 2026 but indicated a mid-20% growth rate for nearline exabytes based on historical performance [58] Question: How is the transition to HAMR technology progressing? - Management reported successful qualification of major cloud service providers and expects to ramp up production of 4 TB per disk drives [47][91] Question: What portion of your LTAs has fixed pricing agreements? - Management confirmed that pricing and volume for 2026 are well defined, with ongoing discussions for 2027 [96][97]

Financial Data and Key Metrics Changes - Seagate reported December quarter revenue of $2.83 billion, representing a 7% sequential increase and a 22% year-over-year increase [14] - Non-GAAP gross margin improved to 42.2%, up 210 basis points sequentially, while non-GAAP operating margin expanded by 290 basis points to 31.9% [14][17] - Non-GAAP EPS was $3.11, reflecting a 19% increase quarter-over-quarter [14] Business Line Data and Key Metrics Changes - The data center market accounted for 87% of shipment volume, with 165 exabytes shipped, up 4% sequentially and 31% year-over-year [15] - Average cloud nearline drive capacities increased to nearly 26 terabytes in the December quarter, indicating a shift towards higher capacity drives [16] - The edge IoT market contributed $601 million, supported by seasonal improvements in consumer products [16] Market Data and Key Metrics Changes - Demand for high-capacity nearline drives in global cloud data centers continued to grow, with sustained demand trends expected to persist [6][7] - Video applications are driving significant demand for hard drives, with platforms like YouTube seeing a surge in uploads [8] - The strategic value of data is increasing, particularly with the rise of AI applications that require large volumes of historic data [9] Company Strategy and Development Direction - Seagate's HAMR technology is positioned as a long-term enabler of mass capacity storage, with expectations to deliver 10 TB per disk early in the next decade [5][12] - The company aims to maintain supply discipline while meeting demand growth through advancements in areal density without increasing unit production volume [7] - Seagate is focused on expanding profitability through a higher capacity product mix, supported by strong demand from AI applications [12][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand environment, particularly among global cloud customers, and expects data center demand to offset typical seasonal declines [20][21] - The company anticipates revenue for the March quarter to be in the range of $2.9 billion ±$100 million, representing a 34% year-over-year improvement [21] - Management highlighted the importance of maintaining pricing discipline and the potential for flat to slightly increasing pricing in the future [26][71] Other Important Information - Seagate generated over $600 million in free cash flow, the highest level in eight years, and retired $500 million in gross debt [14][20] - The company expects capital expenditures for fiscal year 2026 to remain within the target range of 4%-6% of revenue [19][102] - Cash and cash equivalents totaled just over $1 billion, with ample liquidity of $2.3 billion [20] Q&A Session Summary Question: Can you provide more detail on gross margins going forward? - Management indicated that pricing will be dictated by demand, with potential for flat to slightly up pricing as capacity increases [26] Question: Can you help bridge the drivers between mix and price? - Management noted that demand remains strong, and discussions with customers are focused on future planning [32] Question: What is the expected exabyte growth for this calendar year? - Management did not provide specific guidance for calendar 2026 but indicated a mid-20% exabyte growth CAGR is expected [58] Question: How is the transition to HAMR technology progressing? - The transition is on track, with six out of eight top cloud service providers qualified for HAMR technology [46] Question: What portion of your LTAs has fixed pricing agreements? - Management confirmed that volume and pricing for 2026 are well defined, with discussions for 2027 beginning soon [95]

Seagate Technology forecast third-quarter revenue and profit above Wall Street expectations on Tuesday, benefiting from strong demand for its data storage devices as enterprises scale up their use of ... ...

SUPPLEMENTAL FINANCIAL INFORMATION Q2FY26 JANUARY 27, 2026 Safe Harbor Statement and Use of Non-GAAP Financial Information This document and our other communications regarding our quarterly financial results contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical fact. Forward-loo ...

Core Viewpoint - Seagate Technology Holdings Plc. reported strong second-quarter earnings, exceeding analyst expectations in both earnings per share and revenue, indicating robust operational performance and demand in the data center market [2][3]. Financial Performance - Quarterly earnings were reported at $3.11 per share, surpassing the analyst consensus estimate of $2.81 by 10.52% [2]. - Revenue for the quarter reached $2.83 billion, exceeding the Street estimate of $2.73 billion and showing an increase from $2.33 billion in the same period last year [2]. Operational Highlights - The company achieved new records for gross margin, operating margin, and non-GAAP EPS, reflecting strong operational execution and the durability of data center demand [3]. - The ongoing ramp of HAMR-based Mozaic products contributed positively to the performance [3]. Future Outlook - For the third quarter, Seagate expects adjusted EPS to be between $3.20 and $3.60, compared to the analyst estimate of $2.96, and revenue is projected to be between $2.8 billion and $3 billion, exceeding the analyst estimate of $2.77 billion [4].

Financial Performance - Revenue for fiscal Q2 2026 was $2.83 billion, a 21.5% increase from $2.33 billion in fiscal Q2 2025[4] - GAAP gross margin improved to 41.6% from 34.9% year-over-year, while non-GAAP gross margin increased to 42.2% from 35.5%[4] - GAAP diluted earnings per share (EPS) rose to $2.60, up from $1.55 in the same quarter last year, with non-GAAP diluted EPS at $3.11 compared to $2.03[4] - Net income for the six months ended January 2, 2026, was $1,142 million, an increase from $641 million for the same period in the previous year, representing a growth of 78.2%[23] - Non-GAAP gross profit for the six months ended January 2, 2026, was $2,245 million, compared to $1,548 million for the same period in the previous year, reflecting a 45.1% increase[27] - GAAP gross margin improved to 40.6% for the six months ended January 2, 2026, up from 34.0% in the prior year[27] - GAAP diluted net income per share for the six months ended January 2, 2026, was $5.03, up from $2.95 in the prior year, marking a 70.5% increase[29] - Non-GAAP diluted net income per share for the six months ended January 2, 2026, was $5.71, compared to $3.62 for the same period last year, representing a 57.7% increase[29] Cash Flow and Liquidity - Cash flow from operations was $723 million, and free cash flow was $607 million during the quarter[5] - Net cash provided by operating activities for the six months ended January 2, 2026, was $1,255 million, significantly higher than $316 million for the same period last year[29] - Free cash flow for the six months ended January 2, 2026, was $1,034 million, compared to $177 million for the same period in the previous year, indicating a substantial increase[29] - Cash, cash equivalents, and restricted cash at the end of the period were $1,048 million, compared to $1,240 million at the end of the previous year[23] - Seagate's balance sheet remains strong, with cash and cash equivalents totaling $1.0 billion at the end of the quarter[5] Future Outlook - For fiscal Q3 2026, the company expects revenue of approximately $2.90 billion, plus or minus $100 million, and non-GAAP diluted EPS of $3.40, plus or minus $0.20[15] - The company anticipates continued strong demand for data center storage solutions driven by AI applications and evolving market needs[2] Strategic Actions - The company declared a quarterly cash dividend of $0.74 per share, payable on April 8, 2026[8] - The company retired $500 million in Exchangeable Senior Notes due 2028 during the fiscal second quarter[5] - The company redeemed and repurchased $500 million of debt during the financing activities for the six months ended January 2, 2026[23] Operating Metrics - Non-GAAP operating margin for the six months ended January 2, 2026, was 30.5%, up from 21.8% in the prior year[27] - Adjusted EBITDA excludes certain expenses and gains that are not indicative of core operating results, including impairment and other charges related to cost-saving efforts[44] - LTM adjusted EBITDA is defined as the total of last twelve months adjusted EBITDA, used to evaluate the Company's debt portfolio[44] Tax and Accounting Adjustments - The projected non-GAAP income tax rate for fiscal year 2026 is set at 15.5%[41] - Non-GAAP income tax adjustments aim to provide consistency across interim reporting periods[41] - The Company may periodically re-evaluate its non-GAAP tax rate based on changes in tax laws[41] - Non-GAAP diluted share count adjustments are made using the if-converted method for the 2028 exchangeable notes[42] - Strategic investment gains, losses, and impairment charges are excluded to provide a clearer view of the Company's operating performance[39] - Other charges, primarily IT transformation costs, are also excluded for a supplemental view of operating performance[40] - The Company assesses its sources of liquidity and capital structure using free cash flow as a non-GAAP measure[43] - Free cash flow is defined as net cash provided by operating activities less acquisition of property, equipment, and leasehold improvements[43]