Seagate Technology's Q4 2025 Earnings: A Strategic Buy Amid AI-Driven Storage Revolution

Seagate Technology (NASDAQ: STX) is poised to deliver one of its strongest earnings reports in years as it navigates a seismic shift in the global storage landscape. With the fiscal fourth-quarter 2025 earnings report set for July 29, 2025, the company's alignment with AI-driven demand, coupled with robust guidance and historical outperformance, makes a compelling case for a strategic buy ahead of the release.

Earnings Momentum and Guidance: A Recipe for Outperformance

Seagate's recent performance has been nothing short of remarkable. The Zacks Consensus Estimate projects $2.46 per share in earnings and $2.41 billion in revenue for Q4 2025, representing 134.3% and 27.5% year-over-year growth, respectively. Management's guidance—$2.4 billion in revenue (±$150 million) and non-GAAP EPS of $2.40 (±$0.20)—aligns closely with analyst expectations, underscoring confidence in execution.

This momentum builds on Seagate's track record of outperforming estimates by an average of 15.67% in the past four quarters. Over the past year, its shares have surged 47.3%, significantly outpacing the 20.6% growth of the Computer Integrated Systems industry. Such consistency is rare in a sector prone to cyclical volatility, and it reflects Seagate's ability to capitalize on structural trends.

AI-Driven Demand: The New Gold Rush in Storage

The primary catalyst for Seagate's growth is the AI storage boom. Cloud providers and hyperscalers are racing to build AI-ready data centers, creating a surge in demand for high-capacity, energy-efficient storage solutions. Seagate's 24–28 terabyte PMR drives and the HAMR-powered Mozaic 3+ platform have emerged as critical enablers of this transformation.

The Mozaic 3+ line, with its groundbreaking 3 terabytes-per-disk capacity, is now the industry's only product of its kind. Volume shipments to qualified cloud customers are already underway, with broader adoption expected in the second half of 2025. This technology not only addresses the exabyte-scale storage needs of AI but also positions Seagate to capture a significant share of the $23 billion AI storage market by 2028.

Moreover, Seagate's focus on nearline storage—where data is frequently accessed but not stored in real time—aligns perfectly with the data-intensive workflows of machine learning and large language models. The company's mass capacity revenues are projected to grow 39.5% year-over-year to $2 billion in Q4, driven by cloud providers prioritizing AI infrastructure.

Financial Strength and Margin Expansion

Seagate's financials further reinforce its investment appeal. The HDD segment, which accounts for 93.7% of its Q4 revenue ($2.25 billion), is growing at a 30.1% annualized rate. While the non-HDD segment faces a 3.4% decline, this is a minor drag compared to the broader growth story.

Non-GAAP gross margins are expected to expand to 36.8% in Q4, up from 30.9% in the prior-year period. This improvement stems from pricing optimization and strong demand for high-margin nearline products. Additionally, Seagate's cost discipline and supply chain resilience—honed during the pandemic—position it to maintain profitability even amid macroeconomic headwinds.

Risks and Mitigants

Seagate is not without risks. Currency fluctuations, particularly a weak euro and pound against the dollar, could pressure international revenue. Global macroeconomic pressures, including tariffs and rising debt, also linger. However, the company's exposure to these factors is manageable, and its strategic focus on high-growth AI markets offsets many of these concerns.

Historically, Seagate has demonstrated strong post-earnings performance, with a 55% probability of a positive one-day return following reports. Over the past three years, this probability has risen to 64%, with median positive returns of 6.1%. Given its current Zacks Rank #2 (Buy) and Earnings ESP of +2.34%, the odds of an earnings beat—and a corresponding stock rally—are favorable.

Investment Thesis: Strategic Buy Ahead of Earnings

Seagate's Q4 report represents a pivotal moment in its journey. With AI storage demand accelerating, its HAMR technology leading the next phase of areal density growth, and a strong balance sheet supporting margin expansion, the company is well-positioned to outperform.

Investors should consider initiating or increasing positions ahead of the July 29 release, particularly given the historical tendency for positive price reactions to earnings surprises. While risks exist, Seagate's execution track record, favorable guidance, and tailwinds from AI make it a compelling long-term hold.

In conclusion, Seagate's alignment with AI-driven storage demand, coupled with its operational and technological advantages, creates a rare combination of near-term catalysts and long-term growth potential. For investors seeking exposure to the AI revolution, Seagate offers a strategic and well-capitalized entry point.