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AI Cloud Concerns Hover Over Amazon Stock. But Analyst Says Don't Forget This 'Crown Jewel.'
Investors· 2025-10-02 16:10
Group 1: Amazon's Advertising Business - Amazon has built the third-largest advertising business globally, trailing only Meta and Google, with ad revenues growing more than 20% annually since 2019, which is double the pace of Amazon's overall sales growth [2][3] - The advertising business is crucial for Amazon's story, as it targets high-intent shoppers at the moment of purchase, despite accounting for less than 10% of total sales [2][3] Group 2: Amazon Web Services (AWS) and Competition - AWS is the primary profit driver for Amazon and is expected to be a key growth driver over the next three to five years, but the advertising business is more critical for return on invested capital in the one to three-year timeframe [3] - AWS is responsible for over 80% of Amazon's estimated $100 billion capital expenditures in 2025, but it has 50% lower margins than advertising revenues and faces strong competition from Microsoft, Google, and Oracle [3] Group 3: Stock Performance and Analyst Ratings - Amazon stock is currently rated a buy with a price target of $265, trading around $220.62 [4] - The stock has seen a decline of 2% in August and 4% in September, with concerns over tariff impacts and disappointing Q2 results compared to competitors [5][6]
S&P 500 Gains and Losses Today: Robinhood and Western Digital Surge; Vistra Stock Slides
Investopedia· 2025-09-29 22:15
Group 1: Robinhood Performance - Robinhood shares surged over 12% to an all-time high, driven by CEO Vlad Tenev's announcement of surpassing 4 billion event contracts traded on its prediction markets [4][9] - Analysts from Piper Sandler cited the growth in prediction markets as a reason for raising their price target on Robinhood's stock [4] Group 2: Market Overview - Major U.S. equities indexes experienced modest gains, with the S&P 500 advancing 0.3%, the Dow increasing by 0.2%, and the Nasdaq rising by 0.5% [3] - The overall market sentiment was influenced by the potential implications of a government shutdown later in the week [3] Group 3: Other Notable Stock Movements - Shares of Western Digital rose by 9.2% following price target increases from Morgan Stanley and Rosenblatt Securities, attributed to growing demand for hard drives in support of artificial intelligence [5] - Coinbase Global's shares gained 6.8% as the price of Bitcoin and other major cryptocurrencies increased, with regulatory clarity around crypto being advocated by SEC Commissioner Hester Peirce [6] - AppLovin's shares jumped 6.3% to a record high after Morgan Stanley raised its price target, highlighting the upcoming launch of Axon Ads Manager [7] Group 4: Negative Stock Movements - Shares of Vistra fell by 4.5% after announcing a power supply agreement for its Comanche Peak nuclear facility, raising concerns due to a lack of information about the buyer [11] - Carnival's shares dropped 4% despite reporting strong bookings, as the company issued a lower-than-expected forecast for net yields [12] - Williams-Sonoma's shares sank 4.7% following President Trump's announcement of potential tariffs on imported furniture, negatively impacting businesses reliant on imports [10]
Western Digital (WDC) 2025 Conference Transcript
2025-09-03 14:32
Summary of Western Digital (WDC) 2025 Conference Call Company Overview - Western Digital is now a pure-play hard drive company focused on data storage, particularly in the cloud, with 90% of revenue from cloud services and 10% from client and consumer segments [5][6] Core Strategic Priorities 1. **Growth Initiatives**: - Engaging more with hyperscale customers to understand their architectures and use cases [6] - Product leadership through advanced technologies like EPMR and upcoming HAMR [7] - Continuous innovation in platform business relevant for neocloud players and OEMs [8] 2. **Operational Excellence**: - Focus on flawless execution across all business facets, including process re-engineering and technology adoption [8] - Cultural change emphasizing individual performance and results [9] Financial Performance - The third quarter showed a revenue increase of 30% with significant bottom-line growth [12] - Baseline growth projected at 15% exabyte CAGR, with AI uplift case showing 23% growth [13] - Firm purchase orders (POs) secured with top customers extending into fiscal year 2027 [14][15] Demand and Market Dynamics - Demand for hard drives is central to AI growth, with customers recognizing HDDs as critical for their operations [15] - The company is experiencing a multi-quarter growth cycle driven by AI and cloud demand [16] Risk Mitigation Strategies - Focus on supporting capacity growth through improvements in aerial density and reliable production [17][18] - Investments in head and media facilities to enhance production capabilities [18] Tariffs and Supply Chain - Currently not impacted by tariffs due to classification as a semiconductor, with manufacturing capabilities in the U.S. [20] - Ongoing efforts to mitigate potential tariff impacts through supply chain management [20] Customer Engagement and Demand Visibility - Strong partnerships with customers provide early visibility into demand, reducing uncertainty [23] - The company utilizes machine learning algorithms to assess demand signals beyond customer input [22] AI Workloads and Storage Economics - AI workloads require significant storage, with 80% of data in hyperscale data centers stored on HDDs [26] - HDDs are essential for storing models and associated data during AI training processes [25] Competitive Landscape - Despite the rise of SSDs, HDDs remain vital due to their cost-effectiveness and capacity advantages [31] - The company maintains a 6x delta in acquisition costs compared to flash storage, ensuring HDDs remain competitive [31] Financial Health and Shareholder Returns - Strong free cash flow and a healthy balance sheet with $4.7 billion gross debt and $2.1 billion cash [64] - Commitment to returning excess cash to shareholders through dividends and share buybacks [64] Margins and Cost Management - Gross margins have improved from low 30s to mid-40s, with further room for growth [51][53] - Focus on driving down costs per terabyte through higher capacity drives and technology advancements [52] Technology Roadmap - The introduction of UltraSMR technology provides a 20% capacity uplift over standard drives [55] - Ongoing development of HAMR technology aims to enhance capacity and reliability [46] Conclusion - Western Digital is strategically positioned to capitalize on the growing demand for data storage driven by cloud and AI, with a strong focus on customer engagement, operational excellence, and innovative technology solutions [69]
Seagate(STX) - 2025 Q4 - Earnings Call Transcript
2025-07-29 22:02
Financial Data and Key Metrics Changes - The company achieved record gross margin levels with a non-GAAP gross margin of 37.9%, up 170 basis points sequentially [3][4] - Revenue for June reached $2.44 billion, a 13% sequential increase and a 30% year-over-year increase [3][4] - For fiscal year 2025, revenue grew nearly 40% to $9.1 billion, with non-GAAP EPS of $8.10 [4][10] Business Line Data and Key Metrics Changes - Hard drive revenue increased by 14% sequentially, reaching $2.3 billion, driven by nearline cloud sales [4][5] - Mass capacity revenue exceeded $2 billion, up 15% sequentially and 40% year-over-year, with shipments of 151 exabytes [5][6] - Nearline shipments into cloud and edge data centers represented 91% of mass capacity volume, with a 14% sequential increase [5][6] Market Data and Key Metrics Changes - The data center market accounted for approximately 75% of fiscal year 2025 revenue, indicating strong demand from cloud and enterprise customers [7] - The company plans to focus on two main areas: data center and edge IoT, reflecting the AI-driven market [7] Company Strategy and Development Direction - The company is ramping HAMR-based MOSEIK products and has qualified three major cloud service providers [6][10] - The strategic focus is on enhancing profitability and optimizing cash generation through a structurally changed business model [13] - The company anticipates capital expenditures to be within the target range of 4% to 6% of revenue for fiscal year 2026 [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained demand strength for high-capacity nearline drives, supporting revenue and margin expansion [11][12] - The company expects September revenue to be in the range of $2.5 billion, reflecting a 15% year-over-year improvement [12] - Management noted that the visibility gained through their B2O strategy instills confidence in future demand [11][12] Other Important Information - Free cash flow nearly doubled to $425 million in June, with a commitment to return nearly 75% of free cash flow to shareholders [10][11] - The company reduced its debt balance by approximately $150 million during the quarter, exiting with a gross debt of about $5 billion [11] Q&A Session Summary Question: Can you confirm the implied gross margin guidance for September? - Management indicated that the estimate was significantly lower than what is implied in the guidance, expecting higher gross and operating margins than modeled [18][19] Question: What are the trends in AI inference edge demand? - Management noted strong demand for video properties in the cloud and various applications at the edge, indicating growth in data storage needs [22][24] Question: How is the HAMR contribution expected to change in the coming quarters? - Management confirmed steady growth in HAMR and expects a positive impact on gross margins as higher capacity drives are ramped up [35][36] Question: What is the outlook for revenue growth and capacity ramp? - Management stated that demand is strong and above supply, with guidance based on production capabilities and ongoing qualifications [44][46] Question: How does the company view the competitive landscape with NAND? - Management emphasized that the interface between NAND and HDD remains stable, with a strong value proposition for mass data storage in cloud markets [121][122] Question: Can you provide insights on gross margin drivers for September? - Management indicated that improvements would come from higher HAMR volume, better pricing, and cost reductions per terabyte [129][130]
Seagate(STX) - 2025 Q4 - Earnings Call Transcript
2025-07-29 22:00
Financial Data and Key Metrics Changes - Seagate reported June revenue of $2,440 million, up 13% sequentially and 30% year over year [2][3] - Non-GAAP gross margin expanded by 170 basis points sequentially to 37.9% [2][7] - Non-GAAP operating margin increased by 270 basis points to 26.2% [2] - For fiscal 2025, revenue grew nearly 40% to $9,100 million, with non-GAAP EPS of $8.10 [3][11] - Non-GAAP net income was $556 million, resulting in non-GAAP EPS of $2.59 based on a diluted share count of approximately 215 million shares [8] Business Line Data and Key Metrics Changes - Hard drive revenue reached $2,300 million, a 14% sequential increase, driven by nearline cloud sales [3][4] - Mass capacity revenue exceeded $2,000 million, up 15% sequentially and 40% year on year [4] - Nearline shipments into cloud and edge data centers accounted for 91% of mass capacity volume, with shipments of 137 exabytes, up 14% sequentially and 52% year on year [4] - Sales from the legacy market totaled $270 million, up 6% sequentially, while revenue from other product lines increased 3% sequentially to $163 million [5] Market Data and Key Metrics Changes - Data center markets accounted for about 75% of fiscal 2025 revenue, including nearline products sold to cloud and enterprise customers [6] - The company plans to focus on two main areas: data center and edge IoT, reflecting the AI-driven market [6] Company Strategy and Development Direction - Seagate is ramping HAMR-based MOSEIK products and building customer momentum, with three major cloud service providers qualified on these products [5] - The company aims to maintain capital discipline, with anticipated capital expenditures for fiscal 2026 within the target range of 4% to 6% of revenue [10] - The strategic focus is on driving growth, enhancing profitability, and optimizing cash generation, supported by a structurally changed business model and leading technology roadmap [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained demand strength for high-capacity nearline drives, supporting revenue and margin expansion [11] - The company anticipates September revenue in the range of $2,500 million, reflecting a 15% improvement year over year [12] - Management noted that the global minimum tax rate will impact future earnings, with a projected non-GAAP tax rate of 16% [12][131] Other Important Information - Free cash flow nearly doubled in June to $425 million, with a commitment to return nearly 75% of free cash flow to shareholders [10][11] - Cash and cash equivalents increased 9% sequentially to $2,200 million, with a gross debt of approximately $5,000 million [11] Q&A Session Summary Question: Can you confirm the implied gross margin guidance for September? - Management indicated that the estimate was significantly lower than what is implied in the guidance, expecting higher revenue and margins than modeled [18][20] Question: What are the trends in AI inference edge demand? - Management noted strong demand for video properties in the cloud and various applications at the edge, indicating growth in data storage needs [24][25] Question: How is the HAMR contribution expected to change in the coming quarters? - Management confirmed steady growth in HAMR and expects a positive impact on gross margins as higher capacity drives are ramped up [34][35] Question: What is the outlook for revenue growth and capacity ramp? - Management stated that demand is strong and above supply, with guidance based on production capabilities and ongoing qualifications for new products [41][42] Question: How will the global minimum tax impact financials? - Management confirmed that the global minimum tax will affect both GAAP and non-GAAP tax rates, with a similar impact expected [131]
Seagate(STX) - 2025 Q4 - Earnings Call Presentation
2025-07-29 21:00
Financial Performance - Q4FY25 revenue reached $2.44 billion, a 30% increase year-over-year[6] - Non-GAAP gross margin for Q4FY25 was 37.9%, up approximately 700 bps year-over-year[6, 7] - Non-GAAP operating margin for Q4FY25 increased to 26.2%, up approximately 890 bps year-over-year[6, 7] - Non-GAAP diluted earnings per share (EPS) for Q4FY25 expanded to $2.59[6, 7] - Free cash flow for Q4FY25 nearly doubled quarter-over-quarter to $425 million[7] - FY25 revenue increased 39% year-over-year, with gross profit nearly doubling and operating profit more than tripling[7] Market and Technology - Hard drive revenue reached $2.3 billion, up 14% quarter-over-quarter[12] - Mass capacity revenue topped $2.0 billion, up 40% year-over-year[12] - Nearline shipments were 137 exabytes, up 52% year-over-year[12] - Average capacity per drive increased 3% quarter-over-quarter to 13 TB[6, 17] Guidance - Q1FY26 revenue is projected to be $2.50 billion ± $150 million[20] - Q1FY26 non-GAAP operating margin is expected to be in the mid-to-high twenties percentage of revenue[20] - Q1FY26 non-GAAP diluted earnings per share is guided at $2.30 ± $0.20[20]
Undervalued and Profitable: This Artificial Intelligence (AI) Stock Has Soared 73% in 2025, and It Could Still Jump Higher
The Motley Fool· 2025-07-06 19:12
Group 1 - Seagate Technology has experienced a remarkable stock market rally in 2025, with a 73% year-to-date increase, significantly outperforming the Nasdaq Composite index's 7% return [1] - The company's revenue for the first nine months of fiscal 2025 rose nearly 43% year over year to $6.65 billion, with non-GAAP income from operations increasing more than fourfold due to higher margins [3][4] - The growth is driven by strong demand for mass capacity storage in the cloud, which is expected to push annual revenue for the data center storage market to $23 billion by 2028, up from $13 billion last year [4] Group 2 - Seagate holds a 40% share of the global storage market and has guided for $2.4 billion in revenue for the recently concluded fiscal fourth quarter, representing a 27% year-over-year increase [5][6] - For the full fiscal year, revenue is projected to grow by 38%, with adjusted earnings expected to jump more than sixfold to $7.91 per share [7] - The stock is currently trading at 21 times trailing earnings and 16 times forward earnings estimates, which is significantly lower than the Nasdaq 100 index's average forward earnings multiple of 29, indicating an attractive valuation [9]
Seagate (STX) 2025 Investor Day Transcript
2025-05-22 14:00
Seagate (STX) 2025 Investor Day Summary Company Overview - Seagate has been in the hard drive industry for 45 years, focusing on data storage solutions for devices and cloud services [16][14][12] - The company shipped 550 exabytes of data in the past year, which is approximately half a zettabyte, enough to store two-thirds of the data on the world's cell phones [16][12] Industry Insights - The growth of data is a central theme, with projections indicating a mid-twenties compound annual growth rate (CAGR) for data centers over the next decade [23][12] - The world is expected to generate 72 zettabytes of data annually by 2020, with most data not being stored or utilized [21][22] - Nearline storage in data centers is projected to require 7.2 zettabytes of new data over the next four years, surpassing the storage capacity needed in the last decade [24][23] Technology Developments - Seagate is transitioning from perpendicular magnetic recording (PMR) to heat-assisted magnetic recording (HAMR) technology, which will significantly increase storage capacity [46][81] - The introduction of HAMR allows for a jump from 30 terabyte drives to 50 terabyte drives, with expectations to ship 50 terabyte drives by 2028 [47][46] - The company is currently in volume production of Mosaic three technology, which supports three terabytes per disk, and is preparing for Mosaic four, which will support four terabytes per disk [78][95] Financial Performance - Seagate has achieved a 10% uplift in gross margin since the last Analyst Day and has generated $4 billion in free cash flow [69][70] - The company has returned $7 billion in value to shareholders through dividends and share buybacks, including an 11% increase in dividends [69][70] - Seagate has authorized an additional $5 billion for share buybacks, reflecting confidence in long-term growth [70][71] Market Positioning - The company maintains a build-to-order model for 70% of its data center volume, ensuring a disciplined approach to supply and demand [66][67] - Seagate is focusing on both cloud and edge data storage solutions, recognizing the importance of data sovereignty and local data centers [36][37][38] Customer Insights - Customers emphasize the total cost of ownership (TCO) benefits of hard drives compared to solid-state drives (SSDs), with hard drives being six to seven times more cost-effective [74][75] - The demand for higher capacity hard drives is driven by the need for efficient data storage solutions in data centers [75] Future Outlook - Seagate anticipates continued growth in data storage needs driven by emerging applications, particularly in AI and video content [30][31][32] - The company is confident in its ability to innovate and meet future storage demands, with plans for further advancements in technology and capacity [70][71][106]
US stock markets expected to recover after Trump drops tariffs on mobiles
The Guardian· 2025-04-13 17:36
Group 1 - US stock markets are expected to recover following Trump's exclusion of smartphones and laptops from tariffs, which is anticipated to boost shares of Apple and Nvidia [1][2] - The temporary exemption is viewed as a response to pressure from Republican leaders concerned about rising smartphone costs potentially affecting voter sentiment [2][5] - US retailers import approximately 80% of smartphones, many from China, which currently faces tariffs totaling 145% [2][3] Group 2 - US Customs and Border Protection confirmed that laptops, smartphones, and certain chips will be exempt from tariffs, avoiding both the China tariff and a 10% baseline tariff on other countries [3][5] - Trump indicated that more specific exemption rules would be announced, emphasizing that the US has been profiting from trade, particularly with China [4][6] - The US commerce secretary stated that the reprieve is likely temporary, with plans for a specific tariff on the sector to encourage reshoring of manufacturing [5][6] Group 3 - Apple has committed to relocating some facilities back to the US over the next four years, with an estimated cost of $500 billion, including a new factory in Texas for AI servers [8] - The recent tariff imposition led to significant losses for major tech companies, with a total decline of $2.1 trillion, or 14% of their value, before recovering after the tariff pause [9]
Western Digital Stock Is Attractive, Backed By Cheap Valuation And AI Surge: Analyst
Benzinga· 2025-04-10 21:08
Core Viewpoint - Benchmark analyst Mark Miller upgraded Western Digital Corp from Hold to Buy with a price target of $55, citing attractive valuations and growth potential in data center spending and AI opportunities [1] Group 1: Company Performance and Valuation - Western Digital stock is currently trading at the low end of its historical valuation range, which typically spans from mid-single digits to teen multiples [1] - The company reported a record Nearline Exabytes (EB) shipment and Data Center sales last quarter, indicating strong demand in the data center segment [3] - Projected third-quarter revenue for Western Digital is $2.70 billion with an EPS of $1.32, an increase from the prior estimate of $1.12 [5] Group 2: Industry Trends and Opportunities - Nearly two-thirds of companies using cloud storage expect their cloud-based storage to grow by over 100% in the next three years, indicating a significant market expansion [2] - Major cloud service providers, including Alphabet, Amazon, Meta, and Microsoft, are expected to increase their combined capital expenditure by 40%, from approximately $230 billion in 2024 to $322 billion in 2025 [2] - Approximately 89% of data stored by leading cloud service providers is on hard drives, which positions Western Digital favorably as data center spending continues to rise [3] Group 3: AI and Storage Cost Dynamics - The unit price per GB for nearline storage HDDs is $0.013, significantly lower than the $0.123 per GB for large capacity SSDs, making HDDs more cost-effective for data storage [4] - The growth of AI applications is expected to increase the demand for data storage, favoring hard drives over flash storage due to the need for long-term data retention [4] - The anticipated ramp-up of PCs with AI chips in the second half of 2025 is expected to drive a refresh cycle for PCs, further benefiting Western Digital [5]