Seagate: Duopoly Pricing Power Meets AI Storage Demand

Seagate is rated Buy with a $1,000 price target, reflecting durable demand and strong operating leverage in mass-capacity storage for AI-driven data centers. Q4 FY26 delivered record results: revenue up 48% YoY, non-GAAP EPS up 121% YoY, and gross margin at 52.7%, with Q1 FY27 guidance materially above consensus. HAMR technology adoption and long-term nearline exabyte allocation through 2028-2029 underpin STX’s pricing power, margin expansion, and strategic moat over peers. Valuation is stretched after a 390% rally, but risk/reward remains attractive given sequential growth guidance and robust capital returns via buybacks and dividends.

As per McKinsey research, data center capacity demand is on track to rise at a 22% CAGR through 2030 to roughly 220 GW, and AI workloads drive most of that growth. What often gets missed in