Core Insights - NetApp Inc. reported fiscal second-quarter results that exceeded analyst expectations, driven by increased adoption of AI workloads and cloud storage services [1][2] - The company's shares fell over 2% despite the positive earnings report [1] Financial Performance - Adjusted earnings for the quarter ended October 24, 2025, were $2.05 per share, surpassing the consensus estimate of $1.89 [1] - Revenue increased by 3% year over year to $1.71 billion, slightly above the estimated $1.69 billion [1] Segment Performance - All-flash array revenue grew by 9% to $1.0 billion [2] - Public cloud revenue reached $171 million, with first-party and marketplace storage services experiencing a growth of 32% [2] - The company achieved a record Q2 adjusted operating margin of 31.1% [2] Future Guidance - For fiscal 2026, NetApp projected adjusted EPS between $7.75 and $8.05, with a midpoint of $7.90, which is above the $7.75 consensus [2] - Revenue guidance for fiscal 2026 is set between $6.63 billion and $6.88 billion, aligning with market expectations [2]

Financial Data and Key Metrics Changes - The company reported Q2 revenue of $1.71 billion, representing a 3% year-over-year increase. Excluding the divested Spot business, total revenue increased by 4% [4][15] - Non-GAAP earnings per share (EPS) was $2.05, reflecting a 10% year-over-year growth [17] - Gross margin for Q2 was 72.6%, exceeding guidance and up 1.5 percentage points sequentially [16][17] - Operating income was $530 million, up 12% compared to Q2 2025, with an operating margin of 31.1%, an increase of 2.4 percentage points year-over-year [17] Business Line Data and Key Metrics Changes - Hybrid cloud revenue reached $1.53 billion, up 3% year-over-year, driven by product, support, and Keystone services, which grew 76% year-over-year [15] - Public cloud revenue was $171 million, a 2% increase year-over-year, and up 18% excluding the Spot business [15][16] - All-flash array revenue grew 9% year-over-year to $1 billion, with an annualized run rate of $4.1 billion [12] Market Data and Key Metrics Changes - The company closed approximately 200 AI infrastructure and data lake modernization deals across various geographies and industries in Q2 [8] - The first-party and marketplace cloud storage services revenue increased approximately 32% year-over-year [10] Company Strategy and Development Direction - The company is focused on growing markets, particularly in all-flash, public cloud, and AI, which are expected to drive top-line growth [14] - Innovations such as AFX and AIDE are aimed at enhancing AI workload capabilities and improving data management [6][8] - The company is committed to leveraging its competitive advantages and aligning with customer data initiatives to capture additional market share [14][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the uncertain macro environment and expected growth in non-U.S. public sector segments [14][33] - The company anticipates a slight decline in U.S. public sector revenue due to recent shutdowns but expects recovery in the long term [31][34] - Management raised guidance for gross margin, operating margin, and EPS for the fiscal year based on strong Q2 performance [19][20] Other Important Information - Cash flow from operations was $127 million, and free cash flow was $78 million [18] - The company returned $353 million to shareholders through share repurchases and dividends [18] Q&A Session Summary Question: Component environment and pricing dynamics - Management indicated they have locked in prices for components and have visibility for a couple more quarters [21] - They expect product gross margin to remain stable through the rest of the year despite potential volatility in component pricing [22][24] Question: Drivers of product gross margin expansion - Product gross margin expansion is driven by a combination of mix and pricing, with a focus on maintaining operational discipline [27][28] Question: Trends in AI-related transactions - The company reported a stable mix of AI transactions, with a significant increase in the number of deals closed [29][30] Question: Seasonal growth expectations - Management noted that the U.S. public sector business is expected to be slightly below seasonal trends due to recent shutdowns, but they view this as temporary [31] Question: Demand drivers for the second half of the year - Despite U.S. public sector headwinds, management sees acceleration in non-U.S. public sector segments and strong demand for AI projects [33] Question: AI deal sizes and customer feedback - Deal sizes vary widely, and while there is strong interest in the AFX platform, it is still early to assess its impact on results [36] Question: Cash flow and seasonality - Q2 cash flow is typically lower due to seasonality and tax payments, but management expects improvement in the second half [55]

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Core Insights - Backblaze released its Q3 2025 Drive Stats report, analyzing the performance and reliability of over 328,000 hard drives, highlighting a quarterly failure rate increase from 1.36% in Q2 to 1.55% in Q3, with an annualized failure rate (AFR) of 1.57% for 2024 [2][3] Drive Performance and Reliability - Four hard drive models achieved zero failures this quarter: Seagate HMS5C4040BLE640 (4TB), Seagate ST8000NM000A (8TB), Toshiba MG09ACA16TE (16TB), and Toshiba MG11ACA24TE (24TB) [2] - High-capacity drives (20TB+) increased by nearly 8,000 units, now representing 21% of the active drive pool, while the lifetime AFR remained steady at 1.31% [3] Failure Analysis Methodology - Backblaze employs SMART monitoring, drive monitoring tools, and automated data enrichment to differentiate between true mechanical failures and temporary removals, classifying a drive as failed if it does not re-enter the active population by the end of the quarter [4] - The outlier Toshiba MG08ACA16TE (16TB) recorded a high AFR of 16.95%, attributed to ongoing upgrades requiring temporary drive removals rather than mechanical issues, with expectations for normalization in future reports [5] Data Transparency and Community Engagement - Backblaze has built one of the largest collections of drive reliability data over more than ten years, inviting global IT and data science communities to analyze and learn from its openly available reliability metrics [2][6]

Core Viewpoint - Seagate Technology Holdings plc is expected to report strong earnings for the first quarter of fiscal 2026, with a projected earnings per share of $2.36, reflecting a 49.4% year-over-year increase, and revenues estimated at $2.53 billion, indicating a 16.7% rise from the previous year [1][9]. Financial Performance - Management anticipates first-quarter revenues of $2.5 billion, with a potential variance of +/- $150 million, suggesting a 15% year-over-year improvement. Non-GAAP earnings are expected to be $2.3 per share, with a variance of +/- 20 cents [2]. - Seagate has consistently beaten earnings estimates in the past four quarters, with an average surprise of 7% [2]. - The company expects mass capacity revenues to increase by 22.5% year-over-year to $2.1 billion in the fiscal first quarter, while HDD segment revenues are projected to rise by 17.4% to $2.35 billion [8]. Market Dynamics - The demand for mass capacity storage solutions is driven by robust nearline cloud storage needs, with revenues from mass capacity devices increasing by 40% year-over-year to $2 billion [5]. - Cloud service providers are prioritizing AI application development, which is expected to boost HDD demand [6]. - Seagate's new Mozaic 3+ hard drive platform, incorporating HAMR technology, is anticipated to enhance market share in mass capacity storage solutions [7]. Competitive Positioning - Seagate's stock has gained 185% over the past six months, outperforming the Zacks Computer-Integrated Systems industry, which grew by 100% [12]. - The company is trading at a price/earnings ratio of 20.21, which is lower than the industry average of 25.75 but above its historical mean of 11.84 [17]. Strategic Outlook - Management expects improved margin performance due to a favorable product mix and ongoing pricing optimization, with gross margin estimated at 39.4% for the fiscal first quarter, up from 33.3% in the prior year [10]. - The company is positioned for higher profitability and steady dividends in fiscal 2026, supported by a strong product pipeline and disciplined capital allocation [10][19].

Core Insights - Seagate Technology Holdings plc (STX) is experiencing growth with its next-generation Heat-Assisted Magnetic Recording (HAMR)-based Mozaic 3+ platform, driven by demand from global cloud service providers (CSPs) [1][2] - The transition to high-capacity, energy-efficient drives is yielding positive technological and financial results, as highlighted in the latest earnings call [1][4] Company Performance - Seagate's Mozaic 3+ products represent a significant engineering achievement, providing advantages in areal density and total cost of ownership (TCO) [2] - The company has qualified three major CSPs for Mozaic 3+, with additional qualifications underway, leading to increased shipments to cloud customers [2] - Nearline shipments surged 52% year-over-year to 137 exabytes in the June quarter, with record sales for 24TB and 28TB PMR platforms [3] - Non-GAAP gross margins reached a record 37.9% and operating margins were 26.2% in the fourth quarter, reflecting the margin-accretive nature of the Mozaic ramp [4][10] Future Outlook - Seagate plans to qualify its Mozaic 4+ drives, which will have capacities up to 44TB, in the first half of fiscal 2026, further solidifying its leadership in high-capacity storage [5] - The combination of Mozaic 3+ and 4+ is expected to help global CSPs manage exponential data growth efficiently and sustainably [5] Competitive Landscape - Seagate faces competition from HDD and SSD manufacturers like Western Digital Corporation (WDC) and Pure Storage, which are also focusing on high-capacity storage solutions [6] - WDC reported strong demand for its high-capacity drives, shipping over 1.7 million units of 26TB and 32TB drives in the fourth quarter of fiscal 2025 [7] - Pure Storage achieved 13% year-over-year revenue growth in the second quarter of fiscal 2026, driven by its all-flash, software-driven data storage solutions [8] Stock Performance and Valuation - Seagate's shares have increased by 123.5% over the past year, outperforming the Zacks Computer Integrated Systems industry's growth of 53.6% [11] - The forward price/earnings ratio for STX is 21.76X, which is lower than the industry's 24.09X [12] - The Zacks Consensus Estimate for STX's earnings for fiscal 2026 has been revised up by 2.04% to $10.51 over the past 60 days [13]

Core Insights - Backblaze will showcase new research on cloud storage costs affecting media workflows at NAB Show New York on October 22-23, 2025 [2][8] - The research indicates that 93% of media organizations face unexpected cloud storage fees, with nearly half experiencing these fees monthly [3][4] Cloud Storage Costs Impact - Rising egress fees and unpredictable billing models are forcing media and entertainment companies to make compromises that affect content availability and production strategies [3][4] - 61% of organizations reduce dataset sizes to manage costs, limiting access to valuable content archives [6] - 49% shorten retention policies, risking the loss of media that could be repurposed [6] - 41% curtail usage of existing libraries, reducing monetization opportunities [6] - 29% cut staff allocation tied to content workflows [6] Barriers to Switching Providers - 50% of media leaders cite egress and data movement costs as the biggest barrier to switching providers [7] - 34% are contract-locked, while 42% mention technical complexity as another major barrier [7] - Despite these challenges, 64% are at least slightly likely to consider switching providers in the next year, indicating a rising demand for transparent options [7] Industry Preferences - 67% of media and entertainment organizations prefer best-of-breed technology approaches over one-stop-shop solutions, reflecting frustration with restrictive ecosystems [8] - Key attributes valued in storage providers include compliance (50%), ease of use (42%), customer support (37%), and high throughput (31%) [5]

Core Insights - Western Digital Corporation (WDC) has launched an expanded System Integration and Test (SIT) Lab, a 25,600-square-foot facility aimed at accelerating product qualification and enhancing customer collaboration [1][11]. Company Developments - The new SIT Lab is designed to address the increasing demand for faster, reliable, and scalable storage solutions, particularly in the context of artificial intelligence (AI) and cloud workloads [2][3]. - WDC's investment in the SIT Lab reflects its commitment to customer-first priorities, with engineers collaborating with key customers throughout the product lifecycle to ensure that high-capacity HDDs and next-generation data storage systems meet evolving needs [3][5]. - The facility in Rochester integrates with WDC's global network, supporting over 2,000 customer systems across the U.S. and Asia, which is expected to enhance cross-regional collaboration and localized customer support [4][11]. Market Position and Competitive Landscape - The demand for mass-capacity storage is increasing, driven by cloud investment cycles and the expansion of AI-ready data center infrastructure, positioning WDC favorably against competitors like Seagate Technology Holdings plc (STX) [6]. - Seagate is ramping up production of its Mozaic 3+ platform, with significant developments expected in the coming years, indicating a competitive landscape in the storage sector [6][7]. - NetApp is also experiencing growth in demand for its all-flash arrays, with a notable annualized net revenue run rate of $3.6 billion, reflecting a 6% year-over-year increase [8][9]. Financial Performance - WDC's shares have increased by 9.7% over the past month, slightly underperforming the Zacks Computer-Storage Devices industry's rise of 10.1% [12]. - The forward price/earnings ratio for WDC is currently at 16.06X, which is lower than the industry's average of 22.39X, indicating potential value [14]. - The Zacks Consensus Estimate for WDC's earnings for fiscal 2026 has been revised up by 1.85% to $6.62 over the past 60 days, reflecting positive sentiment [15].

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Core Insights - The Zacks Computer-Storage Devices industry faces challenges from escalating trade tensions, macroeconomic turbulence, and intense competition, but benefits from trends like digital transformation, edge computing, and AI workload proliferation [1][2][6] Industry Overview - The industry includes companies that design, develop, manufacture, and market HDDs and SSDs for various devices, with some offering software-defined all-flash solutions and high-performance memory subsystems [3] Trends Influencing Growth - AI is driving demand for high-speed, high-capacity storage solutions, necessitating a shift towards NVMe-based SSDs and object storage for unstructured data [4] - Cloud storage technologies are evolving, with a focus on virtualization and edge computing to manage increasing data complexity and scale [5] Macro Conditions - Trade tensions and inflation are significant concerns, potentially affecting global IT spending, which is projected to reach $5.43 trillion in 2025, a 7.9% increase from 2024 [6] - PC shipments increased by 4.4% year-over-year in Q2 2025, but are expected to plateau in the latter half of the year due to vendor inventory adjustments [7][8] Industry Performance - The Zacks Computer-Storage Devices industry has outperformed the S&P 500 with a 22.7% increase over the past year, compared to the S&P 500's 17.8% gain, but lags behind the broader sector's 28.3% growth [11] Valuation Metrics - The industry is currently trading at a forward 12-month P/E ratio of 21.15X, below the S&P 500's 23.32X and the sector's 28.93X [14] Company Highlights - **Netlist (NLST)**: Experienced a 44% sequential revenue increase to $41.7 million, driven by DDR5 demand, and is pursuing legal actions against Samsung and Micron for patent infringements [20][21] - **Pure Storage (PSTG)**: Expanded its Flash portfolio and reported strong demand for its products, with a Zacks Rank of 3 and a 71.6% stock gain over the past year [25][27] - **NetApp (NTAP)**: Benefiting from demand for all-flash arrays and cloud storage solutions, with Keystone storage-as-a-service revenues growing 80% year-over-year [32][33]