Seagate Technology Holdings Plc (Seagate (STX)) shares are up more than 5% in premarket trading Wednesday after the company reported fiscal fourth-quarter results that blew past analyst expectations. The storage giant is riding a wave of AI-driven data center demand that shows no signs of slowing down.
Seagate's Storage Boom: Record Margins and AI Demand Fuel a Monster Quarter
MarketDash
Seagate crushes Q4 estimates as AI-driven data center demand pushes revenue, margins, and guidance to new highs. Here's what's driving the storage giant's record run.
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Seagate Q4 Details
Seagate reported quarterly earnings of $5.71 per share, beating the Street estimate of $5.09 by 12.18%. Revenue came in at $3.63 billion, topping the consensus estimate of $3.49 billion and jumping from $2.44 billion in the same period last year.
The company shipped 218 exabytes in the June quarter, up 34% year over year. Data center customers accounted for 89% of total shipments, with data center shipments reaching 195 exabytes — up 11% sequentially and 43% year over year. Data center revenue rose to $2.9 billion, up 17% quarter over quarter and 57% year over year.
Adjusted gross margin hit a record 52.7%, expanding 570 basis points sequentially from 47% in the prior quarter. That improvement came from pricing execution and a favorable product mix. Adjusted operating margin improved to 44.6%, up 710 basis points sequentially.
Seagate generated $1.1 billion in free cash flow during the quarter and returned about $283 million to shareholders through dividends and share repurchases. The company ended fiscal 2026 with $1.7 billion in cash and cash equivalents and total liquidity of $3 billion, including its undrawn revolving credit facility.
Management Commentary
On the company's conference call, Seagate said data center demand remained the primary growth driver, contributing roughly 90% of exabyte shipments. Based on existing long-term supply agreements, most of Seagate's nearline exabyte capacity is committed through calendar 2028, with customers already seeking additional commitments extending into 2029 and beyond.
Cloud customers continued to drive nearline storage demand, with Seagate recording three consecutive years of sequential quarterly exabyte growth and no indications of demand slowing. Enterprise demand also improved, with enterprise nearline revenue increasing for the fifth consecutive quarter as customers increasingly adopt modern tiered storage architectures across public cloud, private cloud, and on-premise environments.
Outlook
For the September quarter, Seagate expects revenue of approximately $4.00 billion to $4.02 billion, representing 56% year-over-year growth. The outlook includes non-GAAP operating expenses of around $300 million, a non-GAAP operating margin of around 50%, and non-GAAP EPS of $7.30 ± $0.20.
Seagate expects continued revenue growth, margin expansion, and improved cash generation through fiscal 2027, supported by strong data center demand, increasing HAMR technology adoption, and disciplined execution.
The company also highlighted that physical AI applications — including robotics and autonomous vehicles — are expected to drive additional storage demand as these systems require significant volumes of historical and synthetic data for training and real-world operations.
STX Price Action: Seagate shares were up 5.28% at $786.75 during premarket trading on Wednesday.
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