Seagate's AI Storage Demand Drives Optimistic Forecast

2026-01-28 companies

cupertino, Wednesday, 28 January 2026.
Seagate anticipates exceeding its current quarter’s earnings expectations, fueled by a surge in AI-driven data storage needs. Seagate’s shares rose 219% in 2025 due to the AI boom.

Surpassing Wall Street Expectations

On Tuesday, January 27, Seagate Technology (STX) reported fiscal second-quarter financial results that significantly outperformed analyst projections, signaling a robust recovery in the data storage sector [2][5]. The company posted revenue of $2.83 billion for the quarter ended in December, exceeding the LSEG consensus estimate of $2.73 billion [2]. This represents a year-over-year revenue increase of 21.983 percent—noting the 22% growth reported by the company—highlighting the accelerating demand for mass-capacity storage [8]. Profitability also saw a substantial boost; Seagate reported adjusted earnings per share (EPS) of $3.11, which comfortably beat the analyst estimate of $2.81 [2] and marked a 53% increase compared to the same period a year earlier [1].

The AI Infrastructure Catalyst

The driving force behind Seagate’s resurgence is the intense capital expenditure by technology firms building out infrastructure for artificial intelligence. As enterprises scale their use of large language models, the requirement for data storage has surged [2]. During the fiscal second quarter, Seagate shipped 190 exabytes of storage capacity, a 26% increase from the previous year [8]. This growth is heavily concentrated in the cloud data center market, where revenue reached $2.2 billion, up 28% year-over-year [8]. CEO Dave Mosley emphasized that as AI applications amplify the creation of data, modern data centers increasingly require storage solutions that offer both performance and cost-efficiency at an “exabyte-scale” [2].

Technological Roadmap and Financial Health

Seagate is also aggressively advancing its technological roadmap to maintain its competitive edge. The company is currently transitioning to 4-terabyte (TB) per platter drives and advancing its Heat-Assisted Magnetic Recording (HAMR) technology, which allows for higher storage density [8]. By the end of 2025, Seagate had shipped over 1.5 million HAMR units and is now qualifying new 40TB drives (based on 4TB disks) with major customers [8]. Management indicated that the impact of these higher-density drives will become particularly strong in the calendar year 2027, as they offer a path to further reduce the total cost of ownership for data center operators [8].

Sources

artificial intelligence data storage