Core Insights - Seagate's shares increased by over 10% following a strong fiscal Q1 2026 earnings report, with revenue rising 21% year-on-year to $2.63 billion and adjusted EPS reaching $2.61, surpassing Wall Street expectations [1] Group 1: Operational Performance - Seagate delivered a record 182 exabytes of hard-drive capacity in the quarter ending October 3, 2025, with 159 exabytes from nearline drives, highlighting the importance of cloud exposure in revenue growth [3] - The average capacity per drive increased to 14.6 terabytes, reflecting a 26% year-on-year rise in nearline drive capacity, which supports AI and data-heavy workloads and contributes to margin expansion [4] - Seagate shipped over 1 million Mozaic HAMR drives during the September quarter, indicating a shift from proof-of-concept to commercial production [5] Group 2: Market Position and Future Outlook - Five major cloud service providers have approved Seagate's Mozaic 3+ HAMR platform, with additional qualifications expected to enhance supply visibility and support upgraded guidance [7] - Seagate's advancements in drive density, product qualification, and manufacturing capabilities suggest a pivotal moment, aligning technological progress with increasing AI-driven storage demand [8] - The current market enthusiasm for Seagate may indicate the beginning of a sustained structural uptrend, driven by next-generation HAMR drives and deeper cloud qualifications [9]

Core Insights - Western Digital Corporation (WDC) reported strong financial performance in Q4 fiscal 2025, with non-GAAP earnings of $1.66 per share, exceeding estimates by 12.2% and up from $1.44 in the prior year [1] - The company’s quarterly revenues reached $2.61 billion, a 30% increase year over year, driven by demand for high-capacity storage solutions [2] - For fiscal 2025, revenues surged 51% year over year to $9.5 billion, with significant growth in shipments of high-capacity drives [3] Financial Performance - WDC's Q4 revenues from the Cloud end market, which constitutes 90% of total revenues, increased by 36% year over year to $2.6 billion [5] - Non-GAAP gross margin improved to 41.3%, up 610 basis points year over year, attributed to a shift towards higher-capacity drives and effective cost control [6] - Non-GAAP operating income rose 147% year over year to $732 million, while operating expenses decreased by 16% to $345 million [9] Market Dynamics - The demand for high-capacity storage is being driven by cloud computing and generative AI, which require extensive and cost-effective storage solutions [2] - WDC shipped 190 exabytes of storage in Q4, marking a 32% increase year over year, with nearline drives and 26TB CMR and 32TB UltraSMR products seeing significant demand [3][8] Strategic Developments - On February 21, 2025, WDC split its HDD and Flash businesses into two separate public companies, with the new SanDisk focusing on Flash and AI growth [4] - The company repurchased $149 million in stock during the quarter and authorized up to $2 billion in buybacks, reflecting strong cash flow [11] Future Outlook - For Q1 fiscal 2026, WDC anticipates non-GAAP revenues of $2.7 billion, a 22% year-over-year increase, and non-GAAP earnings of $1.54 per share [12][13]

Core Insights - Seagate Technology Holdings plc reported strong fourth-quarter fiscal 2025 results, with non-GAAP earnings of $2.59 per share, exceeding estimates by 5.3% and reflecting structural improvements and robust cloud-driven demand [1][8] - Non-GAAP revenues reached $2.44 billion, surpassing estimates by 1.6% and showing a 30% year-over-year increase, driven by massive data growth from hyperscale cloud customers and AI workloads [2][8] Financial Performance - Non-GAAP gross margin hit a record 37.9%, up 170 basis points quarter-over-quarter and 700 basis points year-over-year, supported by high-capacity nearline products and pricing strength [13] - Non-GAAP operating income rose to $640 million from $327 million a year ago, with an operating margin increase of 890 basis points year-over-year to 26.2% [14] Revenue Breakdown - Total HDD revenues, which account for 93.3% of total revenues, increased 32% year-over-year to $2.3 billion, driven by strong nearline cloud sales [11] - Mass capacity revenues surged 40% year-over-year to $2 billion, primarily due to increased nearline cloud demand [4][8] Shipment and Capacity - Seagate shipped 162.5 exabytes of HDD storage in the reported quarter, a 42% year-over-year increase, with average capacity per drive rising to 13 TB [6] - Nearline shipments to cloud and edge data centers made up the majority of mass capacity volume, with nearline drives accounting for 91% of total mass capacity exabytes shipped [5] Technology and Growth Drivers - The ongoing implementation and expansion of HAMR technology is a key driver for Seagate's growth, enhancing areal density and supporting next-generation storage solutions [3] - The company continues to benefit from a strong product mix and ongoing pricing improvements, which support non-GAAP hard drive gross margins above the company average [13] Cash Flow and Balance Sheet - As of June 27, 2025, cash and cash equivalents were $891 million, with long-term debt decreasing to $5 billion [15] - Cash flow from operations was $508 million, with free cash flow amounting to $425 million, indicating strong performance and expectations for higher free cash flow in the second half of 2025 [16] Future Outlook - Seagate's guidance for the first quarter of fiscal 2026 anticipates revenues of $2.5 billion (+/- $150 million), indicating a 15% year-over-year improvement [18] - Non-GAAP earnings are expected to be $2.3 per share (+/- 20 cents), with operating expenses projected around $290 million [19]