Seagate Technology Reports 36% Revenue Growth in June Quarter, Driven by Nearline Drive Demand

Seagate Technology Holdings plc (STX) reported a 36.29% revenue growth in the June quarter, driven by increasing demand for cloud computing and record Nearline drive shipments. The company's Nearline drives are fully booked through mid-2026. However, the corporate tax rate is expected to rise significantly to mid-teen percentages in fiscal year 2026 due to the global minimum tax's Pillar Two framework.

Seagate Technology PLC (STX) has reached an all-time high, with its stock price hitting $166.43, marking a significant milestone for the data storage solutions provider. This achievement is part of a remarkable 92.59% return year-to-date, as reported by InvestingPro [1].

The company's impressive stock performance is underscored by a 65.03% increase over the past year, driven by robust market demand for its products and services. Seagate Technology's strategic advancements and ability to capitalize on the growing data storage market have contributed to this upward trajectory [1].

In the June quarter, Seagate Technology reported strong financial results, with revenue hitting $2.44 billion and earnings per share at $2.59, both exceeding analyst estimates. The company also provided guidance for the September quarter, projecting revenue of $2.5 billion and earnings per share of $2.30 [1].

Several analysts have responded positively to these developments, raising their price targets for Seagate. Rosenblatt increased its price target to $200, highlighting Seagate’s slight earnings beat and positive trends such as margin expansion. TD Cowen raised its price target to $175, citing momentum in Heat-Assisted Magnetic Recording (HAMR) technology and improved cloud visibility. Benchmark also raised its price target to $165, acknowledging strong demand in the cloud sector and record Nearline drive shipments. Mizuho adjusted its price target to $160, maintaining an Outperform rating due to robust cloud demand. Cantor Fitzgerald reiterated an Overweight rating with a price target of $175, noting Seagate’s strong performance within its coverage universe [1].

Seagate Technology's stock performance is not only driven by strong financial results but also by the increasing demand for cloud computing and record Nearline drive shipments. The company's Nearline drives are fully booked through mid-2026, reflecting the growing need for data storage solutions in the cloud sector [2].

However, Seagate Technology faces a potential challenge in the form of a rising corporate tax rate. The global minimum tax's Pillar Two framework is expected to push the corporate tax rate to mid-teen percentages in fiscal year 2026, which could impact the company's profitability [3].

In conclusion, Seagate Technology PLC's stock performance reflects a strong market position and robust demand for its data storage solutions. The company's ability to adapt to market trends and capitalize on growth opportunities has contributed to its impressive stock performance. However, investors should be mindful of the potential impact of the rising corporate tax rate on the company's future profitability.

References:
[1] https://au.investing.com/news/company-news/seagate-technology-stock-reaches-alltime-high-at-16643-93CH-3995807
[2] https://za.investing.com/news/company-news/seagate-technology-stock-reaches-alltime-high-at-16643-93CH-3856130
[3] https://ca.investing.com/news/company-news/seagate-technology-stock-reaches-alltime-high-at-16643-93CH-4177028