Sometimes in business, you run out of stuff to sell. And if you're Seagate Technology Holdings (STX), that turns out to be a pretty great problem to have.

Seagate shares rocketed more than 20% on Wednesday after the data storage giant delivered knockout quarterly results and revealed something remarkable: its nearline storage capacity is completely booked through the end of 2026. Not just mostly allocated. Fully sold out.

When Selling Out Is Actually Good News

The company reported earnings of $3.11 per share, comfortably beating the $2.81 analyst consensus. Revenue came in at $2.83 billion, ahead of the $2.73 billion Street estimate and up significantly from $2.33 billion in the same quarter last year. But the real story was in the margins and what CEO Dave Mosley had to say about future demand.

"Seagate's December quarter results exceeded our expectations on both the top and bottom line, setting new records for gross margin, operating margin and non-GAAP EPS," Mosley said. "This performance highlights our team's strong operational execution, the durability of data center demand, and the ongoing ramp of our HAMR-based Mozaic products."

On the earnings call, Mosley explained that orders for the first half of 2027 are expected to open in the coming months. Even more telling: the company is already in discussions with customers about 2028. That's how eager hyperscalers are to lock down storage capacity as their needs continue expanding.

Analysts Get Enthusiastic

The results prompted two firms to dramatically raise their price targets to $500. Cantor Fitzgerald analyst C.J. Muse bumped his forecast from $400, maintaining an Overweight rating. Muse pointed to incremental gross margins of around 70% during the December quarter and an implied gross margin guide of at least 44% going forward.

The tight supply-demand environment for hard disk drives is enabling like-for-like pricing increases, Muse noted. Add in higher pricing for Heat-Assisted Magnetic Recording (HAMR) products and approximately 10% annual cost reductions, and you get material margin expansion. Cantor also highlighted that calendar year 2026 exabyte capacity is fully allocated, with Seagate building backlog for 2027 and customer conversations extending into 2028.

Rosenblatt Securities analyst Kevin Cassidy also raised his price target to $500 from $370, keeping a Buy rating. The firm increased its valuation multiple to 25 times from 20 times non-GAAP EPS, citing expanding gross margins above 45% and operating margins above 35%.

Cassidy described the current hard disk drive market as "Goldilocks"—delivering steady gains with rising revenue, expanding margins, and stronger earnings momentum. Not too hot, not too cold, just right.

Looking Ahead

For the third quarter, Seagate guided adjusted EPS of $3.20 to $3.60, well above the $2.96 analyst estimate. Revenue is expected to land between $2.8 billion and $3 billion, compared to the Street's $2.77 billion expectation.

The stock closed up 20.10% at $446.50, hitting a new 52-week high. When you're sold out for the next two years and your margins are expanding, apparently Wall Street takes notice.