Seagate Technology (STX) Surges 3.07% on Earnings, AI-Driven Demand Boosts Five-Day 11.50% Rally

Seagate Technology (STX) surged 3.07% on Wednesday, marking its fifth consecutive day of gains and a 11.50% rally over five trading sessions. The stock hit an intraday high of $142.25, its highest level since August 2025, driven by robust demand for its high-capacity storage solutions amid AI and cloud computing expansion.

Recent earnings results highlighted Seagate’s outperformance, with Q4 fiscal 2025 non-GAAP earnings of $2.59 per share exceeding estimates by 5.3%. Revenue rose 30% year-over-year to $2.44 billion, fueled by surging orders from hyperscale cloud providers and AI infrastructure projects. The company’s nearline storage products accounted for 91% of mass capacity exabytes shipped in the June quarter, reflecting a 42% year-over-year increase in exabyte shipments to 162.5 exabytes.

Strategic investments in Heat-Assisted Magnetic Recording (HAMR) technology have positioned Seagate to capitalize on next-generation storage demands. The adoption of HAMR-enabled drives, including 26TB and 32TB models, has improved areal density and supported the company’s leadership in high-capacity HDDs. Three major cloud clients have already qualified HAMR-based Mozaic products, with additional partnerships in development.

Operational efficiency and pricing discipline further bolstered investor confidence. Seagate’s non-GAAP gross margin expanded 700 basis points year-over-year to 37.9% in Q4, driven by a favorable product mix and cost management. The company reported $640 million in operating income for the quarter, up from $327 million in the prior year, while adjusted EBITDA grew 73% to $697 million.

Positive market sentiment was reinforced by Seagate’s Q1 2026 guidance, which forecasts $2.5 billion in revenue and $2.3 per share in non-GAAP earnings. Continued demand for nearline storage and cost controls underpin the outlook, supported by strong cash flow generation. The company’s $891 million in cash reserves and plans to resume share repurchases highlight its financial flexibility amid macroeconomic uncertainties.

Competitive advantages in energy-efficient HDDs and total cost of ownership metrics have strengthened Seagate’s market position relative to peers. Exabyte shipments outpaced industry rivals, while HAMR technology provides a long-term edge as data storage demands grow. Despite a high debt burden, disciplined capital allocation and robust free cash flow generation mitigate risks, ensuring sustainability in a dynamic sector.