Core Insights - The demand for data storage stocks is driven by the explosion of data from AI, cloud computing, and digital transformation, with Seagate Technology Holdings plc (STX) and Pure Storage Inc. (PSTG) representing traditional HDDs and modern enterprise flash storage, respectively [1][24] Market Overview - The global data storage market is projected to grow from $298.5 billion in 2026 to $984.6 billion by 2034, at a CAGR of 16% [2] - The HDD market is expected to expand from $51.8 billion in 2026 to $69.7 billion by 2031, at a CAGR of 6%, while the enterprise flash storage market is projected to grow from $29.04 billion in 2025 to $49.87 billion by 2030, at an 11.42% CAGR [2] Seagate Technology Holdings (STX) - Seagate reported record revenue of $2.83 billion in the fiscal second quarter, a 22% increase year over year, driven by strong demand for HAMR drives and data centers [4][7] - The company has a fully booked capacity through 2026 and anticipates continued revenue and profit growth, with average nearline drive capacity increasing 22% year over year to nearly 23 TB per drive [5][8] - Seagate's strong cash flow supports ongoing investment in innovation and shareholder returns, with $154 million returned to shareholders in the fiscal second quarter [9] - The company faces challenges from forex volatility, competition, and high debt levels, with long-term debt at $4.5 billion as of January 2, 2026 [10] Pure Storage Inc. (PSTG) - Pure Storage's revenue grew 16% year over year to $964.5 million in the fiscal third quarter, driven by strong demand for FlashBlade and enterprise offerings [13] - The company raised its fiscal 2026 revenue outlook to $3.63–$3.64 billion, indicating 14.5–14.9% year-over-year growth [14] - However, Pure Storage faces headwinds from competition, rising NAND costs, and macroeconomic uncertainty, which could pressure pricing and margins [11][12] - The company plans to invest in R&D and has authorized an additional $400 million for share repurchase [15] Valuation and Performance - Over the past month, STX and PSTG have gained 62.1% and 8.3%, respectively, with STX trading at 35.8X forward earnings compared to PSTG's 95.9X [16][17] - The Zacks Consensus Estimate for STX's earnings for fiscal 2026 has been revised up by 2.7% to $11.61, while PSTG's estimate has been revised down by 1% to $1.95 [19][23] - STX is currently rated as a Zacks Rank 1 (Strong Buy), while PSTG holds a Zacks Rank 4 (Sell), indicating a more favorable investment outlook for STX [24]

Core Insights - Pure Storage (PSTG) is focusing on enhancing shareholder returns, backed by improved operating performance and strong cash flow visibility [2] - The company announced its largest-ever share repurchase authorization of $400 million, indicating increased confidence in business momentum and balance sheet strength [2] Financial Performance - In the last reported quarter, Pure Storage achieved a 16% year-over-year revenue growth, reaching $964 million, with an operating margin of 20.3% [3] - The company ended the fiscal third quarter with cash and cash equivalents totaling $1.5 billion, and cash flow from operations was $116 million, up from $97 million in the prior-year quarter [3] - Free cash flow increased to $52.6 million compared to $35.2 million in the year-ago quarter, reflecting strong financial flexibility [3] Shareholder Returns - In the fiscal third quarter, Pure Storage returned $53 million to shareholders through the repurchase of 0.6 million shares [4] - The new $400 million buyback authorization is in addition to the remaining $20 million from a previous $250 million buyback plan [4] Capital Allocation Strategy - Management emphasizes disciplined capital allocation while investing in innovation, allowing for opportunistic share repurchases amid changing market conditions [5] - The company continues to invest heavily in AI and has seen solid momentum in its Evergreen//One and modern virtualization products [5] Industry Comparisons - Seagate Technology (STX) resumed share repurchases and increased its quarterly dividend by 3% to 74 cents per share, committing to return at least 75% of free cash flow to shareholders [7] - NetApp (NTAP) reported $3 billion in cash and equivalents, with free cash flow of $78 million, and returned $353 million to shareholders through dividends and share repurchases [8][9] - Western Digital Corporation (WDC) repurchased nearly 6.4 million shares for $553 million and paid $39 million in dividends, reflecting strong demand and cost management [10][11]

Core Insights - Western Digital Corporation's HDD business is experiencing significant revenue growth driven by a shift towards higher-capacity drives and increasing exabyte demand from large-scale customers [2][3] - The company is focused on advancing HDD technology to enhance capacity, performance, energy efficiency, and total cost of ownership for customers [2] Revenue Growth and Market Demand - In the fiscal first quarter, Western Digital shipped 204 exabytes of storage, marking a 23% year-over-year increase, largely due to the rising adoption of AI and data-intensive workloads [3] - The demand for higher-capacity HDDs is evident, with over 2.2 million units of ePMR-based products shipped in the September quarter [3] Technological Advancements - Western Digital is progressing with its next-generation HAMR drives, with all top seven customers placing orders through the first half of 2026, indicating strong customer confidence [4] - The qualification process for HAMR technology is aimed at ensuring reliability and performance, with volume production expected to ramp up in the first half of 2027 [5] Future Outlook - Management anticipates ongoing revenue growth in the second quarter of fiscal 2026, projecting non-GAAP revenues of $2.9 billion, which represents a 20% increase year-over-year [7] - The proliferation of generative AI is expected to drive a refresh cycle in client and consumer devices, boosting long-term content growth across various sectors [6] Competitive Landscape - Competitors like Pure Storage are also experiencing growth, with a raised fiscal 2026 revenue outlook and strong sales momentum in enterprise storage [8][9] - Micron Technology is benefiting from the expanding AI-driven memory and storage markets, with anticipated revenues of $18.7 billion for the fiscal second quarter [11] Stock Performance and Valuation - Over the past three months, Western Digital's shares have increased by 62.7%, outperforming the Zacks Computer-Storage Devices industry's growth of 23.8% [12] - The forward price/earnings ratio for Western Digital is currently at 20.36X, slightly above the industry's 19.68X [14] - The Zacks Consensus Estimate for Western Digital's earnings for fiscal 2026 has been revised up by 0.4% to $7.66 [15]

Core Insights - Pure Storage (PSTG) reported third-quarter fiscal 2026 non-GAAP earnings per share (EPS) of 58 cents, missing the Zacks Consensus Estimate of 59 cents, but up from 50 cents in the prior-year quarter [1] - The company generated $964.5 million in revenues, a 16% year-over-year increase, surpassing management's expectations and the consensus mark [2] - Pure Storage raised its fiscal 2026 revenue outlook to $3.63–$3.64 billion, indicating 14.5–14.9% year-over-year growth [4] Financial Performance - Product revenues amounted to $534 million, up 18% year-over-year, contributing 55.4% to total revenues [7] - Subscription services revenues rose 14% to $430 million, accounting for 44.6% of total revenues [7] - Subscription annual recurring revenues (ARR) reached nearly $1.8 billion, up 17% year-over-year [8] Operational Highlights - The company exceeded its full-year goal of 2 exabytes of hyperscale shipments in the fiscal third quarter and anticipates further shipments in the fiscal fourth quarter [3] - Non-GAAP gross margin improved to 74.1% from 71.9% in the prior-year quarter, with product gross margin at 72.9% [12] - Non-GAAP operating income was $196.2 million, exceeding the outlook and up from $167.3 million in the year-ago quarter [13] Cash Flow and Shareholder Returns - Pure Storage ended the fiscal third quarter with cash and cash equivalents of $1.5 billion, unchanged from the previous quarter [14] - Cash flow from operations was $116 million, compared to $97 million in the prior-year quarter, with free cash flow at $52.6 million [14] - The company returned $53 million to shareholders through share repurchases during the quarter [15] Future Guidance - For fiscal Q4, Pure Storage expects revenues in the range of $1.02-$1.04 billion, indicating a 17.1% increase at the midpoint from the year-ago level [16] - Non-GAAP operating income is projected to be $220-$230 million, reflecting around 47% year-over-year growth at the midpoint [16]

Financial Data and Key Metrics Changes - Revenue for Q3 FY26 was $964 million, representing a 16% year-over-year growth, while operating profit grew 17% year-over-year to $196 million, achieving an operating margin of 20.3% [19][24] - Total gross margin increased to 74.1%, with subscription services gross margin at 75.5% and product gross margin at 72.9% [23][24] - Annual recurring revenue (ARR) grew 17% to $1.8 billion, and total remaining performance obligations (RPO) increased 24% to $2.9 billion [22] Business Line Data and Key Metrics Changes - Product revenue reached $534 million, growing 18% year-over-year, while total contract value (TCV) sales for storage as a service offerings grew 25% year-over-year to $120 million [21][22] - Subscription services revenue in Q3 was $430 million, accounting for 45% of total revenue [22] - The number of customers deploying the Fusion platform has more than tripled since the beginning of the year, indicating strong demand [7] Market Data and Key Metrics Changes - U.S. revenue was $683 million, growing 22%, while international revenue was $281 million, growing 4% year-over-year [23] - The company added 258 new customers, with a penetration rate of 63% in the Fortune 500 [23] Company Strategy and Development Direction - The company aims to capitalize on the financial benefits from hyperscaler revenues to make significant investments in R&D and sales and marketing to sustain momentum and capture additional profitable growth opportunities [26][28] - The focus is on expanding the Enterprise Data Cloud and enhancing the capabilities of the Pure Fusion platform to meet evolving customer needs [10][11] - The company plans to grow its hyperscaler business and evaluate additional business model options that may change gross margin economics in FY27 [28] Management's Comments on Operating Environment and Future Outlook - Management anticipates increased commodity pricing and excess demand will pressure global supply chains, but the company is well-prepared with a resilient supply chain and strong business continuity plans [16] - The outlook for Q4 anticipates revenue in the range of $1.02-$1.04 billion, representing a 17.1% year-over-year increase at the midpoint [25] - The company expects operating profit for FY26 to be in the range of $629-$639 million, reflecting a 13.3% year-over-year increase at the midpoint [26] Other Important Information - The company has a strong balance sheet with $1.5 billion in cash and investments, and Q3 operating cash flow was $116 million [24] - The company returned $53 million to shareholders through share repurchases and has $56 million remaining in its buyback authorization [24] Q&A Session Summary Question: Impact of memory price inflation on margins and revenue - Management explained that commodity pricing affects overall market pricing, and higher prices generally lead to increased revenue across the storage market, benefiting the company [32][34] Question: Increase in inventory and its implications - Management noted that the increase in inventory was due to tariff mitigation purchases and strategic positions in key components to avoid supply chain disruptions [38][40] Question: Product gross margin and mix shift - Management confirmed that higher-end product configurations contributed positively to product gross margins, alongside revenue from Portworx licenses and hyperscaler shipments [44][46] Question: Feedback on Enterprise Data Cloud - Early feedback on the Enterprise Data Cloud has been positive, with significant demand for cloud-native solutions and improved customer engagement across various roles [50][52] Question: Engagements with hyperscalers - Management indicated ongoing engagements with top hyperscalers, with multiple proofs of concept underway, and emphasized investments in product SKUs and technology to drive growth [58][61] Question: Changes in demand dynamics due to memory costs - Management acknowledged that while rising prices could constrain demand, the overall demand for data remains strong, particularly due to AI [84][86] Question: Expectations for gross margin dynamics as hyperscale business scales - Management highlighted that while current gross margins are strong, exploring new revenue models with hyperscalers could impact future gross margin economics [70][72] Question: Operating margin trajectory into FY27 - Management reassured that they expect operating profit to grow beyond FY26, with continued investments in growth areas [80][81]

Q3 Fiscal 2026 Financial Results December 2, 2025 Forward Looking Statements and Non-GAAP Information This presentation contains forward-looking statements regarding our products, business and operations, including but not limited to our views relating to our future period financial and business results, our opportunity relating to hyperscale and AI environments, our ability to meet hyperscalers' performance, price and other requirements, our ability to expand with our current hyperscale customer and to lan ...

Core Insights - Pure Storage, Inc. (PSTG) is set to report its third-quarter fiscal 2026 results on December 2, 2025, with earnings expected to be 59 cents, reflecting an 18% increase year-over-year, and total revenues estimated at $958.1 million, indicating a 15.3% growth from the previous year [1][3] Financial Performance - PSTG has achieved a trailing four-quarter earnings surprise of 12.4%, consistently beating estimates [2] - For the fiscal third quarter, PSTG anticipates revenues between $950 million and $960 million, representing a 15% increase at the midpoint compared to the previous year [4] - Non-GAAP operating income is projected to be between $185 million and $195 million, with around 14% growth at the midpoint [4] Growth Drivers - The company is experiencing widespread growth across its portfolio, driven by strong enterprise demand and increasing traction in key software and services such as Evergreen//One, Cloud Block Store, and Portworx [3] - Subscription services revenues are a significant contributor, with expectations of reaching $452.3 million, a 20.2% year-over-year increase [5] - The launch of the Enterprise Data Cloud (EDC) is expected to enhance governance, scalability, and agility while reducing costs [6][7] Strategic Initiatives - Initial collaborations with hyperscalers transitioning to DirectFlash technology are expected to support growth [3] - The co-engineering partnership with Meta is progressing, with the first volume rollout underway and initial revenue recognized [3] - Recent advancements in partnership with Cisco aim to enhance AI project scalability [9][10] Market Challenges - Management expresses caution regarding economic fluctuations and tariff volatility, alongside fierce competition in the flash-based storage market [8]

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 - Pure Storage has been recognized as a Leader in the 2025 Gartner Magic Quadrant for Infrastructure Platform Consumption Services, marking a significant achievement in the industry [1][5]. Group 1: Market Definition and Purpose - The Infrastructure Platform Consumption Services (IPCS) market is defined as a consumption-based, as-a-service offering for mission-critical infrastructure, including storage, compute, and network services [2]. - The primary purpose of IPCS is to provide a platform-services-based infrastructure that supports hybrid-cloud environments, focusing on SLA-based outcomes that enhance cost optimization, productivity, sustainability, and cyber resilience [3]. Group 2: Product Features and Innovations - The Pure Storage platform offers a unified architecture that ensures end-to-end data control, automation, and cyber resilience, facilitating data mobility and consistency across various infrastructures [4]. - The Evergreen//One model provides flexible consumption options, allowing customers to scale usage without penalties and adapt pricing to actual usage, enhancing financial flexibility [6]. - The platform's intelligent control plane automates data provisioning and management, supporting AI initiatives by ensuring data security and accessibility [6]. Group 3: Industry Recognition and Partnerships - Pure Storage's recognition in two Gartner Magic Quadrant reports in 2025 underscores its unmatched agility and risk reduction capabilities across on-premises, public cloud, and hybrid environments [5]. - The extensive partner ecosystem includes major companies such as AWS, Cisco, Microsoft Azure, and NVIDIA, enhancing the platform's capabilities in hybrid cloud, AI, and data center modernization [6].

Core Insights - Pure Storage, Inc. (PSTG) has demonstrated strong stock performance, gaining 68.6% over the past three months, significantly outperforming the Zacks Computer-Storage Devices industry, the Zacks Computer and Technology sector, and the S&P 500, which grew by 35.4%, 13.2%, and 7.6% respectively [1][8]. Performance Drivers - The stock rally is attributed to increasing investor confidence driven by AI-related demand, a subscription-based growth model, and the rising need for flash-based storage solutions [4][8]. - Strong demand from large enterprises and ongoing momentum in products like FlashBlade, particularly FlashBlade//E, along with the adoption of core software and services offerings, are key growth catalysts [5][10]. - Subscription services revenues reached $414.7 million, representing a 14.8% increase, with annual recurring revenues nearing $1.8 billion, up 18% year-over-year [5][11]. Product and Service Innovations - The introduction of the Enterprise Data Cloud (EDC) and enhancements to the Pure Storage Platform are expected to boost revenue growth by enabling businesses to leverage AI for improved workflow efficiency [6][7]. - New storage products, including FlashArray//X R5 and FlashArray//C R5, have been launched, with FlashArray//XL 190 expected to be available in the fourth quarter of fiscal 2026 [9][10]. Strategic Partnerships and Market Position - A strategic partnership with Meta Platforms has progressed to the first volume deployment, with revenues recognized in the fiscal second quarter [11]. - Management anticipates deploying 1-2 exabytes of DirectFlash technology by fiscal 2026, indicating strong confidence in future performance [11]. Financial Outlook - The company expects revenues between $3.6 billion and $3.63 billion for fiscal 2026, reflecting a 14% year-over-year growth at the midpoint, which is an increase from the previously guided 11% growth [11]. - Pure Storage reported cash and cash equivalents of $1.5 billion and free cash flow of $150.1 million in the fiscal second quarter [13]. Shareholder Returns - The company returned $42 million to shareholders through share repurchases in the fiscal second quarter, with $109 million remaining under its current authorization plan [14]. Competitive Landscape - Despite strong performance, Pure Storage faces challenges from economic pressures and intensifying competition in the flash-based storage market [15][16]. - The stock is currently trading at a premium with a forward 12-month Price/Earnings ratio of 39.34X compared to the industry average of 22.39X [18].