Core Insights - Seagate Technology Holdings plc (STX) reported strong second-quarter fiscal 2026 results, with non-GAAP earnings of $3.11 per share, surpassing both the Zacks Consensus Estimate of $2.83 and management's guidance of $2.75 per share, reflecting a 19% quarter-over-quarter increase [1][10] - Non-GAAP revenues reached $2.83 billion, exceeding the Zacks Consensus Estimate by 2.7% and showing a 22% year-over-year growth, driven by robust demand in data center markets [2][10] Financial Performance - The data center segment accounted for 79% of total revenue, amounting to $2.2 billion, which represents a 28% year-over-year growth and a 5% sequential increase [7] - The edge IoT segment contributed 21% of revenue, totaling $601 million, up 2% year over year and 17% sequentially, supported by seasonal strength in consumer products [8] - Seagate shipped 190 exabytes of HDD storage, a 26% year-over-year increase, with the data center market representing 87% of shipments [9] Strategic Positioning - The company's strategy focuses on balancing performance with cost efficiency, aligning with the growing demand for AI-generated data, suggesting sustained long-term demand [3] - Average nearline drive capacity increased by 22% year over year to nearly 23 TB per drive, indicating strong adoption of higher-capacity products [4] Margin and Cash Flow - Non-GAAP gross margin reached a record 42.2%, up 210 basis points quarter over quarter and 670 basis points year over year, driven by high-capacity product adoption [11] - Cash flow from operations was $723 million, compared to $532 million in the previous quarter, with free cash flow reaching $607 million, marking a 42% sequential increase [13] Future Outlook - For the fiscal third quarter, Seagate expects revenues of $2.9 billion, indicating a 34% year-over-year improvement, with non-GAAP earnings projected at $3.40 per share [15] - The company anticipates continued strong demand from global cloud customers, which is expected to offset typical seasonality in the edge IoT markets [15][17]