Seagate recently highlighted an important point about AI: it’s not just dependent on powerful GPUs. Once AI models are trained, all the resulting data needs to be stored somewhere – and often, that ‘somewhere’ is traditional hard drives. A significant amount of AI-generated data ultimately ends up on them.
I was really happy to see the stock jump after hours – they just reported an awesome fourth quarter! The earnings were solid, their future projections beat expectations, and what I especially liked was how clearly management explained their plans for AI storage. It wasn’t just hype; it felt like a real, achievable strategy.
The recent renewed interest in a decades-old storage technology boils down to economics. As data storage needs grow to massive scales, this technology offers a potentially cost-effective way to increase capacity without significantly increasing power consumption or expenses, especially with advancements in drive technology.
Seagate reported strong fiscal fourth quarter 2026 results with revenue reaching $3.629 billion and earnings per share (non-GAAP diluted) at $5.71. Looking ahead to the first quarter of fiscal year 2027, the company anticipates revenue around $4.1 billion (with a potential range of plus or minus $100 million) and earnings per share of $7.30 (plus or minus $0.20). Management highlighted strong demand from cloud providers and data centers, noting that the growth of artificial intelligence is significantly increasing data creation, which benefits Seagate’s mass capacity storage solutions like Mozaic and HAMR technology. The company also demonstrated financial strength with $1.118 billion in free cash flow, used to pay down debt ($302 million) and return value to shareholders ($283 million). Investors reacted positively, sending the stock price up approximately 6% in after-hours trading on July 28, 2026, following the release of these results. This followed an upgrade from Wells Fargo to Overweight on July 10.
What actually moved STX today
As a crypto investor, I’ve been watching traditional tech, and Seagate’s latest earnings report really caught my eye. They brought in $3.629 billion in revenue last quarter, with earnings per share at $5.71 – a nice improvement from the lows we saw when storage was oversupplied. It’s not the explosive growth of some AI chip companies, but it *proves* that demand for storage related to AI is happening right now, and they’re already seeing it in their orders. Seagate specifically highlighted strong business from cloud and data center customers, which makes sense because that’s where AI storage needs are growing the fastest.
Looking ahead, we expect revenue of $4.1 billion, with a possible range of plus or minus $100 million, for the first quarter of fiscal year 2027. We also anticipate non-GAAP earnings per share of $7.30, plus or minus $0.20. This suggests our recent growth isn’t a temporary blip. When storage companies like Seagate increase their revenue forecasts during a period of increased capital expenditure, it indicates that major customers are continuing to place orders at a steady rate (Seagate Technology Investor Relations press release).
The market was already showing optimism before the earnings report. Wells Fargo’s upgrade of Seagate on July 10, 2026, with a higher price target, indicated positive expectations from analysts. Following the report on July 28, the stock rose more than 6% in after-hours trading as investors responded favorably to strong financial results and a promising outlook for AI storage, as reported by Benzinga and Techmeme.
AI needs capacity, not just compute
Everyone focuses on speeding up AI training with powerful hardware, but it’s easy to overlook how much storage all that data requires. While training needs a lot of processing power, running and maintaining an AI model relies heavily on storing vast amounts of information – including the original training data, different versions of the model, records of its performance, and even user-created content. The most actively used data lives on fast, but expensive, storage. Everything else gets moved to more affordable options like high-capacity hard drives, which are still the most cost-effective choice for large-scale data storage.
Cloud providers are creating storage levels where frequently used information is kept on fast NVMe drives, while larger amounts of data and older logs move to more affordable hard drive systems. The difference in cost per terabyte is significant – even small savings per gigabyte quickly add up to millions at large scales. These savings are then reinvested into purchasing more GPUs. As AI data continues to grow rapidly, these different storage tiers will also expand accordingly.
Seagate believes that as artificial intelligence creates more data and increases its importance, there will be a continuing need for large-capacity storage. They emphasized their Mozaic platform, using HAMR technology, to continually increase how much data each drive can hold. This helps data centers reduce the number of servers, power consumption, and maintenance costs for the same amount of overall storage. This message is particularly appealing to data center operators who are always looking to minimize space and energy use (according to Seagate CEO Dave Mosley).
By the numbers: revenue, EPS, and cash
There was substance behind the story.
- Revenue: $3.629 billion in Q4 FY26.
- Profitability: non-GAAP diluted EPS of $5.71.
- Liquidity: $1.118 billion of free cash flow generated in the quarter.
- Balance sheet: $302 million of debt retired.
- Capital returns: $283 million sent back via dividends and buybacks.
This situation is unique because the company is generating cash from repurposing existing assets while also investing in future growth. Unlike some recoveries in the storage market, where increased revenue is offset by the cost of restocking inventory, this rebound appears more stable. This is due to careful supply management and consistent customer demand.
The company’s outlook is also important. By predicting roughly $4.1 billion in revenue next quarter with increased profits, they’re suggesting that pricing and product choices remain strong. If you’re an investor, you’ll want to see this lead to improved efficiency without dramatically raising prices and potentially losing customers. Storage demand can quickly fall if price increases are too aggressive. A better approach is to increase profits by improving storage capacity – packing more terabytes onto each drive, increasing data density, and keeping unit costs stable.
Here’s a helpful tip: During times of excitement around artificial intelligence investments, pay close attention to how quickly companies are turning their assets into cash and how their day-to-day finances are changing. A key sign that demand might be slowing down is if a company’s inventory or money owed by customers starts to increase rapidly even as sales are going up.
Mozaic/HAMR in plain English
You’re likely to hear the terms ‘Mozaic’ and ‘HAMR’ when talking about Seagate. HAMR, which stands for heat assisted magnetic recording, is a technology that uses a laser to heat very small areas on the hard drive’s platter while data is being written. This allows more data to be packed onto the same space without causing errors. Essentially, more data in the same area means bigger hard drives.
Why does this matter? Data center storage costs aren’t just about the hard drives themselves. A significant portion comes from the racks, electricity, cooling systems, and the staff needed to replace failing drives. Reducing the number of drives and servers needed to store the same amount of data directly lowers overall costs. This is especially important for artificial intelligence, as data volumes are increasing faster than most data centers can expand their physical space or power capacity.
Mozaic is Seagate’s complete system built around their new HAMR technology, including improvements to the disk itself, read/write heads, and internal software to ensure it works consistently. The biggest concern with HAMR has always been manufacturing it efficiently and making sure it’s reliable. However, if Seagate can successfully produce and ship drives using this technology, it will significantly increase storage capacity and put pressure on competitors to catch up. Seagate is indicating this is moving beyond the testing phase, but they still need to prove they can manufacture it on a large scale.
You don’t have to understand the technical details of HAMR technology to assess Mozaic’s success. Simply monitor two key indicators: the amount of storage each drive provides and whether customers are buying the same drives again. If both of these numbers increase, it means Mozaic is performing well.
What could go wrong from here
All AI infrastructure deals come with complexities. Storage is particularly tricky, so here are a few key areas to watch out for:
- Customer concentration risk. Hyperscalers drive a large chunk of mass capacity demand. If even one slows orders, quarterly numbers can whipsaw.
- Pricing cycles. HDD is cyclical. Overproduction or a sudden pause in deployments can trigger price cuts that squeeze margins.
- Flash competition. If NAND prices correct hard, some warm tiers can shift from HDD to high-capacity QLC flash. That would dent the mix.
- HAMR execution. New recording tech has to maintain yields and field reliability. Any stumble could delay the capacity curve.
- Macro and capex budgets. AI budgets are big, but they are not infinite. Delays in data center builds or power access can push storage orders to the right.
- Regulatory and supply chain. Export controls or component shortages can ripple through lead times and costs.
Keep a close eye on the difference between when you ship products and when you receive payment. If shipments slow down but revenue stays steady, it might mean your current prices won’t stay high for long.
Angles traders and long-onlys are considering
Event follow-through
When a company’s earnings are strong and they have a promising long-term outlook, investors often buy the dip if the stock price initially falls. The key now is whether the stock can stabilize and stay above its recent jump, or if it will fall back down to fill that gap. How the overall market – especially other companies involved in artificial intelligence technology – is performing is also important to watch.
Mix and margin checks
Over the next few months, our focus will be on balancing new, high-capacity drive shipments with maintaining healthy profit margins and avoiding price increases that could deter customers. The speed at which customers adopt our Mozaic platform will be a key indicator of success.
Cash returns vs. reinvestment
In the fourth quarter, Seagate gave $283 million back to its investors and paid off $302 million in debt, all while producing $1.118 billion in free cash flow. With continued strong cash flow, the company is considering how best to use it – whether to buy back more stock or invest further in capital expenditures and research & development to increase storage capacity. Both options are viable, but the best choice will depend on how demand changes in the future.
Read the capex tea leaves
Keep a close eye on what major cloud providers are spending on infrastructure – it’s a good sign of where the overall economy is headed. If these companies continue to heavily invest in AI over the next few years, storage companies are likely to benefit. However, if they shift their focus to cost-cutting and maximizing existing resources, growth will likely slow down, and companies with overly optimistic valuations could see their stock prices fall.
Why crypto and Web3 folks should care
From what I’m seeing, this initially appears to be an issue primarily impacting stock investments. However, it definitely has implications for the crypto world as well. Blockchains are fundamentally data systems – full nodes maintain a complete historical record, rollups generate and process data packets, and companies analyzing the market collect massive amounts of information. As someone working on Web3 infrastructure, it’s clear we’re facing similar storage challenges to major cloud providers. We rely on fast NVMe drives for frequently accessed data and more affordable HDDs for everything else; it’s a familiar tiered approach.
I’ve been looking into how AI is changing the crypto space, and it’s creating a huge amount of data. Everything from categorizing transactions on the blockchain to building more sophisticated risk assessment tools generates a lot of historical data, logs, and the files that power these AI models. This means the cost of storing all that information is becoming a really important factor. While cheaper storage doesn’t directly make crypto tokens more valuable, it *does* reduce costs for developers building on these platforms. Interestingly, decentralized storage networks are also competing in this space, and improvements in hard drive technology could allow them to scale more efficiently – if there’s enough demand, of course.
Improvements in how data is stored, driven by artificial intelligence, could benefit the foundational elements of cryptocurrency. Often, the most significant opportunities for growth are found in these less flashy, core areas.
How to evaluate the next wave of AI infrastructure winners
I’ve been looking at Seagate as an example of how to find other companies that will benefit from the growth of AI – not just the chipmakers everyone’s focused on. I’ve put together a quick list to help me identify these potential investments, and it might be useful for you too.
- Unit economics beat. Does the company have a credible path to lower total cost of ownership for customers at scale, not just headline performance?
- Visible demand. Are orders tied to a few lighthouse buyers, or is there a broad base across cloud, enterprise, and service providers?
- Roadmap credibility. Are the next two product turns already in customer pilots, with early field data to back claims?
- Cash conversion. Is growth translating into free cash flow, even as they invest?
- Supply discipline. Are inventories, lead times, and channel health supportive, or flashing yellow?
- Ecosystem pull. Do partners and integrators build around the platform, making it the default pick in RFPs?
Seagate showed positive signs this quarter, but that doesn’t guarantee its stock will always perform well. However, it does explain why investors are interested in companies providing the less visible, but essential, components for artificial intelligence systems.
For straightforward, up-to-date information on how company earnings impact the crypto world, visit Crypto Daily. We focus on delivering useful, real-world insights.
Frequently Asked Questions
Why did Seagate stock jump after earnings?
The company’s excellent fourth-quarter performance, combined with promising forecasts for increased revenue and earnings next quarter, and its focus on the growing demand for AI storage in cloud computing and data centers, led to a significant positive market reaction. On July 28, 2026, the stock price jumped approximately 6% in after-hours trading following the release of these results and projections.
What parts of Seagate’s business benefit most from AI?
Large hard drives are ideal for cloud storage and data centers. Artificial intelligence generates massive amounts of data, which is often stored long-term in more affordable storage tiers. High-capacity drives offer the best value for this type of data storage.
What is Mozaic/HAMR, and why is it important?
Heat-assisted magnetic recording (HAMR) increases storage density on hard drives by using heat to improve how data is written. Mozaic is Seagate’s technology for implementing HAMR. Because HAMR allows more data to be stored on each drive, it reduces the number of servers and energy required to store large amounts of information – a significant benefit for data centers looking to cut costs.
Is Seagate’s guidance reliable?
While not a definite prediction, the company currently expects around $4.1 billion in revenue for the first quarter of fiscal year 2027, along with improved earnings per share. This indicates that demand remains strong right now. Investors will be paying close attention to what products are selling well, pricing strategies, and whether customers are delaying purchases or spreading out orders.
Could cheaper flash undercut HDD demand?
It depends on the storage level. When the price of NAND flash memory drops significantly, less frequently accessed data can sometimes be moved to QLC flash. However, for very large amounts of rarely used data, traditional hard drives generally offer a lower cost per terabyte. The best choice ultimately comes down to current prices and power usage limitations.
How does this matter for crypto infrastructure?
Web3 platforms are generating increasing amounts of data, including blockchain information, rollup data, and analytics. Using hard drives, which offer lower costs per terabyte and greater storage capacity, can reduce infrastructure expenses. This benefits those running Web3 networks, data providers, and decentralized storage systems, allowing them to grow and operate more effectively.
What are the main risks for STX from here?
Several factors could negatively impact our short-term performance, including a heavy reliance on a few large customers (hyperscalers), fluctuating prices for hard drives, challenges in manufacturing with new hard drive technology (HAMR), possible price drops in flash memory, and overall delays in business spending. Any of these issues alone could put pressure on our results.
2026-07-29 12:08