# Seagate Technology (STX) Sector: Data storage hardware | Field | Value | |---|---| | Price | $506.14 | | Market cap | $116B | | Intrinsic value source | Analysts | | Data as of | 2026-11-10 | | Next earnings | 2027-01-26 (estimate) | Analysts: Bullish Picks: Top pick Discount category: Below intrinsic value ## In short The market fears that Seagate's record hard drive margins are a cycle peak, and results on guidance with strong HAMR drive sales through 2027 can close the gap. ## Themes and gap - Themes: AI supplier (ai-supplier) - Gap type: Can close (closable) - Why: The Q2 fiscal 2027 report, expected in late January 2027, shows whether revenue, margins and guidance hold after the record Q1. ## About Seagate Technology designs and makes hard disk drives and other mass-capacity data storage products. The data center market gave 81% of revenue in the quarter to October 2, 2026, mainly through high-capacity nearline drives that cloud companies buy. Its Mozaic platform uses heat-assisted magnetic recording (HAMR) to store more data on each disk. It also sells drives and systems for edge and IoT uses, which gave 19% of revenue. Seagate shipped 220 exabytes of hard drive capacity in that quarter. Revenue was $12.2 billion in fiscal 2026, up 34%. Seagate is a public limited company incorporated in Ireland, and its fiscal year ended on July 3, 2026. ## Thesis The market prices Seagate for the risk that the present hard drive shortage ends. Revenue grew 61% in Q1 fiscal 2027, the non-GAAP gross margin reached 57.8%, and the data center market gave 81% of revenue. In past cycles, drive prices and margins fell fast when cloud customers slowed their purchases or when the industry added capacity. The share price fell sharply from September to early November 2026, although Seagate guided to higher revenue and EPS for Q2 fiscal 2027. For the gap to close, three things must be true. Revenue and non-GAAP EPS must meet the Q2 fiscal 2027 guidance of $4.8 billion and $9.20 per share. Gross margins must stay high as Seagate moves more customers to its HAMR-based Mozaic drives. Cloud customers must keep their long-term orders, so that supply and demand stay in balance through 2027. The Q2 fiscal 2027 report, expected in late January 2027, gives the next test. If these checks pass, the gap can close within about four quarters. The main reason it may not close is a downturn in data center spending, which can cut prices and margins quickly. ## Checkpoints - Oct 27, 2026: Q1 fiscal 2027 results. Status: Passed. Watch: Revenue and non-GAAP EPS at or above the guidance of $4.1 billion and $7.30 pass; results below guidance or a weak outlook fail. Outcome: Revenue was $4.23 billion and non-GAAP EPS was $7.68, above guidance, and Seagate guided to higher revenue and EPS for Q2 fiscal 2027. - Jan 26, 2027 (estimate): Q2 fiscal 2027 results: margins and orders. Status: Pending. Watch: Revenue near $4.8 billion, non-GAAP EPS near $9.20, a stable gross margin and a higher outlook pass; lower prices, a lower margin or weaker guidance fail. ## Balance sheet - Cash: $1.3B - Debt: $2.4B - Net debt: $1.1B - Undrawn credit line: $1.3B, to January 2030 - Last debt due: 2034 Seagate cut its debt quickly in 2026. Long-term debt was $2,351 million at October 2, 2026, down from $3,565 million at July 3, 2026, and cash was $1,258 million. On October 15, 2026, Seagate redeemed $750 million of 9.625% senior notes due 2032, so gross debt fell to about $1.6 billion. The remaining senior notes are due from 2029 to 2034. Seagate had $1.3 billion available under its revolving credit facility, which runs to January 30, 2030, and no borrowings under it. Free cash flow was $1.5 billion in Q1 fiscal 2027 and $3.1 billion in fiscal 2026. Seagate pays a quarterly dividend of $0.76 per share. As of 2026-10-02. Sources: - https://www.sec.gov/Archives/edgar/data/1137789/000113778926000300/stxq12027pressreleasefinan.htm - https://www.sec.gov/Archives/edgar/data/1137789/000113778926000309/stx-20261002.htm - https://www.sec.gov/Archives/edgar/data/1137789/000113778926000153/stxq42026pressreleasefinan.htm ## Dividends - Dividend yield: 0.6% (last 12 months, at the current price) - Paid per share, last 12 months: $2.96 (4 payments) - Current annual rate: $2.96 ($0.74 x 4 a year) - Payout ratio: 21% of the earnings of the last fiscal year (the year ended 2026-07-03) - Latest ex-dividend date: 2026-09-24, $0.74 per share - Growth over the last 5 years: 2.0% a year Dividends per share by year: 2016: $2.52, 2017: $2.52, 2018: $2.52, 2019: $2.54, 2020: $2.62, 2021: $2.71, 2022: $2.80, 2023: $2.80, 2024: $2.82, 2025: $2.90. Source: company filings and market data, read on 2026-11-09. ## Recent events - 2026-10-27: Seagate reported Q1 fiscal 2027 results. Revenue rose 61% to $4.23 billion, the non-GAAP gross margin was 57.8% and non-GAAP diluted EPS was $7.68, above the guidance of $7.30, plus or minus $0.20. Free cash flow was $1.5 billion. Seagate retired $1.2 billion of debt and raised its quarterly dividend by about 3% to $0.76. For Q2 fiscal 2027, it guided to revenue of $4.8 billion, plus or minus $100 million, and non-GAAP EPS of $9.20, plus or minus $0.20. - 2026-10-15: Seagate redeemed all $750 million of its 9.625% senior notes due 2032. Gross debt fell to about $1.6 billion. - 2026-09-08: Seagate settled exchanges of $150.51 million of its 3.50% exchangeable senior notes due 2028 with 1,647,862 shares and redeemed the rest of these notes for cash. - 2026-07-28: Seagate reported fiscal 2026 results. Revenue rose 34% to $12.2 billion, non-GAAP diluted EPS was $15.58 and free cash flow was a record $3.1 billion. In Q4 fiscal 2026, revenue was $3.63 billion and non-GAAP EPS was $5.71. Seagate retired $1.4 billion of debt during the year. - 2026-04-28: Seagate reported Q3 fiscal 2026 results. Revenue was $3.11 billion, above the high end of its guidance, and non-GAAP diluted EPS was $4.10. Seagate retired $641 million of debt. ## Latest news and filings - Last earnings: 2026-10-27 (8-K: https://www.sec.gov/Archives/edgar/data/1137789/000113778926000300/) - Next earnings: 2027-01-26 (expected; the company has not confirmed it) | Filed | Form | Headline | Period end | XBRL document | Link | | --- | --- | --- | --- | --- | --- | | 2026-10-29 | 10-Q | Quarterly report for the period ended Oct 2, 2026 | 2026-10-02 | stx-20261002 | https://www.sec.gov/Archives/edgar/data/1137789/000113778926000309/stx-20261002.htm | | 2026-10-28 | 8-K | Shareholder vote results | | stx-20261024 | https://www.sec.gov/Archives/edgar/data/1137789/000113778926000305/stx-20261024.htm | | 2026-10-27 | 8-K | Earnings release and Investor disclosure | | stx-20261027 | https://www.sec.gov/Archives/edgar/data/1137789/000113778926000300/stx-20261027.htm | | 2026-09-09 | 8-K | Investor disclosure and Other company news | | | https://www.sec.gov/Archives/edgar/data/1137789/000119312526385961/d109585d8k.htm | | 2026-09-04 | 8-K | Change of directors or officers | | stx-20260902 | https://www.sec.gov/Archives/edgar/data/1137789/000113778926000201/stx-20260902.htm | | 2026-08-04 | 10-K | Annual report for the period ended Jul 3, 2026 | 2026-07-03 | stx-20260703 | https://www.sec.gov/Archives/edgar/data/1137789/000113778926000159/stx-20260703.htm | | 2026-07-28 | 8-K | Earnings release and Investor disclosure | | stx-20260728 | https://www.sec.gov/Archives/edgar/data/1137789/000113778926000153/stx-20260728.htm | | 2026-06-12 | 8-K | Investor disclosure and Other company news | | | https://www.sec.gov/Archives/edgar/data/1137789/000119312526268170/d24300d8k.htm | | 2026-05-28 | 8-K | Investor disclosure and Other company news | | | https://www.sec.gov/Archives/edgar/data/1137789/000119312526243110/d106085d8k.htm | | 2026-05-21 | 8-K | Investor disclosure and Other company news | | | https://www.sec.gov/Archives/edgar/data/1137789/000119312526233588/d72241d8k.htm | Every filing on SEC EDGAR (CIK 1137789): https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001137789&type=&dateb=&owner=include&count=40 ## Risks - High: Hard drive demand and prices move in cycles. The data center market gave 81% of revenue in Q1 fiscal 2027. If cloud customers slow their purchases or the industry adds capacity, prices and margins can fall quickly, as in past downturns. - Medium: Seagate depends on the ramp of its HAMR-based Mozaic drives. Delays or low yields can raise costs and give competitors a chance to take share. - Medium: The 10-Q says that the sales cycle for nearline storage is long and hard to predict. This makes it hard to forecast results and manage inventory. - Medium: Seagate makes quarterly payments under a settlement with the U.S. Bureau of Industry and Security over hard drive sales to Huawei from 2020 to 2021. Trade restrictions and tariffs can also limit sales or raise costs. - Low: Solid state drives and other storage technologies compete with hard drives for some uses. A faster fall in flash prices can move part of the demand away from hard drives. ## Links - Page: https://picks.utilarium.app/company/STX/ - History of changes: https://picks.utilarium.app/company/STX/history/ - JSON with full history: https://picks.utilarium.app/data/company/STX.json > Picks is a personal record of stock picks. It gives general opinions about stocks, including a "Top pick" label. They are not tailored to your needs, goals or risk tolerance. Kevin is not a registered adviser and relies on the general-advice exemption in Canadian securities law (NI 31-103 s.8.25). Do your own research, or ask a registered adviser. Kevin may hold any stock on this site. Prices, intrinsic values and ratings can be delayed or wrong; check the original source. Full disclaimer: /disclaimer/.