Can Video Data Growth Drive Demand for Seagate's HDD Portfolio?

Seagate Technology Holdings plc STX anticipates a rise in video applications to boost demand for hard drives or HDDs. As video content volume increases, the need for scalable and cost-effective storage infrastructure grows, especially within large cloud data centers.

On the last earnings call, management highlighted the accelerating pace of video creation across cloud platforms. Citing an example, STX noted that YouTube now witnesses 20 million video uploads daily, compared with a mere 2 million three years ago, underscoring how video has emerged as one of the largest contributors to data growth across cloud environments.

Management highlighted that this does not yet include the entire surge of content generation expected from evolving AI-driven video applications. The emergence of Agentic AI will drive up HDD demand further as it requires continuous access to large volumes of historical data for effective planning, reasoning and decision-making.

Seagate Technology Holdings PLC Price, Consensus and EPS Surprise

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Further, Seagate noted that beyond social media platforms, this video content data is increasingly used by companies to drive actionable input as well as enable personalized marketing, interactive education and advanced simulations designed to train professionals in sectors such as manufacturing, engineering and healthcare.

Seagate emphasized that HDDs provide the optimal balance of capacity, performance and cost efficiency for storing massive data sets for data centers. The company’s HAMR technology positions it to gain from the explosion in video data and subsequent surge in storage requirements.

On the last earnings call, Seagate noted that quarterly HAMR shipments surpassed 1.5 million units by the year-end and continue to increase. Mozaic 3 is now qualified with all major U.S. CSPs and on track for global CSP qualification by the first half of calendar 2026. Meanwhile, second-generation Mozaic 4 qualifications are progressing well. These milestones support its long-term areal density roadmap extending to 10TB per disk early next decade.

However, this opportunity is unfolding in an already intensely competitive market, where Seagate faces tough competition from traditional HDD companies, such as Western Digital Corporation WDC, as well as flash-based alternatives.

Mapping the Competitive Terrain

Western Digital remains one of Seagate’s closest competitors. The rapid adoption of AI and data-intensive workloads at hyperscalers is fueling strong demand for its solutions.

The company is advancing areal density gains, accelerating its HAMR and ePMR roadmaps and driving adoption of higher-capacity and UltraSMR drives. In the fiscal second quarter, it shipped more than 3.5 million latest-generation ePMR drives, supporting up to 26TB CMR and 32TB UltraSMR capacities, underscoring strong customer adoption. Western Digital shipped a total of 215 exabytes to customers, marking a 22% year-over-year increase. The reliability, scalability and TCO benefits of Western Digital’s ePMR and UltraSMR technologies remain key to its success in the data center market.

Among flash-based alternatives, Everpure PSTG is one of the prominent players in the data storage space. Increasing adoption of flash storage, advantages of all-flash arrays in data centers, strong partner base and growth prospects in emerging data-driven markets are key positives.

PSTG continues to focus on innovations tailored for modern data workloads, particularly AI, containerization and high-performance computing, as well as work on advancing its cloud-native storage strategy. The company is also expanding its data management capabilities through the strategic acquisition of 1touch. The acquisition adds technology that provides data discovery, classification, governance, cyber resilience and sovereignty, forming a key foundation for Enterprise Data Cloud and large-scale AI deployment.

STX Price Performance, Valuation and Estimates

In the past month, STX’s shares have lost 6% compared with the Computer Integrated Systems industry’s decline of 2.4%.

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In terms of forward price/earnings, STX’s shares are trading at 23.31X, higher than the industry’s 15.27X.

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The Zacks Consensus Estimate for STX’s earnings for fiscal 2026 has been revised up 12.2% to $12.68 over the past 60 days.

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Currently, Seagate sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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Western Digital Corporation (WDC): Free Stock Analysis Report

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