Seagate shares surged in premarket trading after the company issued stronger-than-expected guidance for its fiscal fourth quarter, pointing to rising demand for data storage fueled by artificial intelligence (AI). The upbeat forecast has reignited investor interest in storage hardware, a sector that had long been viewed as slow-growing.
The company expects Q4 revenue of approximately $3.45 billion, plus or minus $100 million, along with adjusted earnings per share of about $5.00. These projections exceed Wall Street estimates, which had forecast revenue of $3.16 billion and EPS of $3.97.
Seagate’s recent performance highlights the growing role of AI in driving infrastructure demand beyond semiconductors. As AI models require massive datasets—including text, images, and video—storage capacity has become a critical component of the ecosystem. This shift is bringing renewed attention to hard disk drive manufacturers that specialize in high-capacity, cost-efficient storage.
For its fiscal third quarter, Seagate reported revenue of $3.11 billion, up significantly from $2.16 billion a year earlier. Profitability also improved sharply, with GAAP earnings per share reaching $3.27 and adjusted EPS climbing to $4.10, more than doubling year over year.
CEO Dave Mosley described the quarter as “outstanding,” citing strong margins and nearly $1 billion in free cash flow. He emphasized that the company is entering a “new era of structural growth,” driven by accelerating data creation linked to AI applications.
A key focus for Seagate is increasing areal density—the amount of data that can be stored on a disk surface. Higher density allows customers to scale storage without increasing physical footprint, a major advantage for data centers and cloud providers.
The positive outlook lifted other storage and memory stocks as well. Western Digital, SanDisk, and Micron all moved higher in sympathy, reflecting broader optimism that AI spending is expanding across the tech hardware stack.
Seagate also reported strong momentum in its data center segment, with total exabyte shipments rising 39% year over year and data center shipments up 47%. This underscores the growing demand for large-scale storage solutions as AI workloads expand.
Financially, the company generated $1.1 billion in operating cash flow and $953 million in free cash flow during the quarter. It also reduced debt by roughly $641 million and returned $191 million to shareholders through dividends and buybacks.
Despite the optimism, some risks remain. Investors are increasingly questioning whether the rapid AI-driven rally in tech stocks can be sustained. Concerns include potential overinvestment, uncertain timelines for returns, and broader macroeconomic pressures such as tariffs and geopolitical tensions.
Seagate noted that its guidance assumes only a limited impact from current trade conditions. However, any escalation in supply chain disruptions or a slowdown in cloud infrastructure spending could pose challenges.
Overall, the company’s results suggest that AI demand is extending well beyond chips and into the foundational layers of technology infrastructure. The key question now is whether this momentum can be sustained as competition intensifies and market expectations continue to rise.
