Seagate Stock Surges as AI-Driven Data Storage Demand Booms

Seagate Technology (STX) shares jumped Wednesday as several analysts raised their price targets for the data storage solutions provider's stock following the company's fiscal second-quarter results, which topped estimates. The surge in Seagate's stock price reflects the growing demand for data storage driven by the adoption of artificial intelligence (AI) and machine learning (ML) applications.

Morgan Stanley analysts called Seagate's stock a "top pick," citing a "period of AI-driven storage demand growth." The analysts said accelerating data growth is pushing up demand for storage both in the cloud and on-premises, which benefits Seagate. Morgan Stanley lifted its price target to $134 from $129 and maintained an "overweight" rating. Elsewhere, analysts at Mizuho boosted their price target to $115 from $107, and Citi increased its target to $125 from $120. The consensus target compiled by Visible Alpha is $117, an 8% premium over Wednesday’s closing price of $108.18.



Seagate said Tuesday it is ramping up production of its high-capacity hard drives based on HAMR (heat-assisted magnetic recording) technology, which Mizuho analysts added could act as a tailwind going into the back half of the year. Shares of Seagate surged close to 7% Wednesday and are up more than 21% over the past year.

The increasing demand for data storage, driven by AI adoption, significantly impacts Seagate's long-term growth prospects. According to a global Recon Analytics survey commissioned by Seagate, business leaders from across 15 industry sectors and 10 countries expect that adoption of AI applications will generate unprecedented volumes of data, driving a boom in demand for data storage, in particular cloud-based storage. With hard drives delivering scalability relative to terabyte-per-dollar cost efficiencies, cloud service providers rely on hard drives to store mass quantities of data. Analyst firm IDC estimated that 89% of data stored by leading cloud service providers is stored on hard drives. Now, according to this Recon Analytics study, nearly two-thirds of respondents (61%) from companies that use cloud as their leading storage medium expect their cloud-based storage to grow by more than 100% over the next 3 years.

Seagate's strategic partnerships and collaborations with cloud service providers and AI companies position the company to capture market share in the AI-driven data storage market. Seagate has partnered with Microsoft Azure to provide high-capacity, low-cost storage solutions for Azure customers. This collaboration allows Seagate to tap into Microsoft's extensive customer base and offer tailored storage solutions for AI workloads. Seagate also collaborates with AI companies to develop storage solutions that meet the unique demands of AI workloads. For example, Seagate has worked with NVIDIA to create storage solutions optimized for AI training and inference.

In conclusion, Seagate's stock surges as AI-driven data storage demand booms, reflecting the growing demand for data storage driven by the adoption of AI and ML applications. Seagate's strategic partnerships and collaborations with cloud service providers and AI companies position the company to capture market share in the AI-driven data storage market. As the demand for data storage continues to grow, Seagate's innovative HAMR technology and strategic partnerships enable the company to capitalize on this trend and drive long-term growth.