Seagate Technology Holdings plc saw its shares rally sharply in premarket trading Wednesday after the data-storage firm issued fiscal fourth-quarter guidance that surpassed Wall Street expectations. The company's bullish outlook is fueling confidence that the artificial intelligence boom is extending beyond chips into broader tech infrastructure.
For the fiscal fourth quarter ending in July, Seagate projects revenue of approximately $3.45 billion, plus or minus $100 million, and non-GAAP diluted earnings per share of $5.00, with a 20-cent range. This compares with the LSEG consensus of $3.16 billion in revenue and adjusted EPS of $3.97, underscoring the strength of AI-driven demand for storage.
The results mark a notable shift: AI's appetite is not limited to graphics processors and memory chips; it also requires massive storage capacity for training and running models on vast datasets of text, images, and video. This has brought hard-disk-drive makers like Seagate back into the spotlight, reversing a period of perceived slow growth in the sector.
In its fiscal third quarter ended April 3, Seagate posted revenue of $3.11 billion, up sharply from $2.16 billion a year earlier. GAAP diluted earnings rose to $3.27 per share from $1.57, while non-GAAP diluted earnings more than doubled to $4.10 per share. CEO Dave Mosley called the results "outstanding," highlighting record margins and nearly $1 billion in free cash flow.
Mosley described the company as entering "a new era of structural growth," with AI driving data creation and storage needs. Seagate's strategy centers on areal density—maximizing data storage per disk surface—which appeals to customers seeking higher capacity without expanding physical footprint.
Seagate's stock surged nearly 18% in premarket trading, lifting other storage and memory names. Western Digital gained 9.5%, SanDisk advanced about 5%, and Micron Technology rose roughly 3%. If these gains hold, the group would add approximately $42 billion in combined market value.
During the earnings call, Mosley noted that AI is boosting demand in areas like video, as major cloud providers integrate AI features to enhance engagement and generate new revenue streams, which in turn produces more video content requiring storage. Total exabyte shipments jumped 39% year over year, with data-center exabyte shipments up 47%. (An exabyte equals one billion gigabytes.)
The company also highlighted stronger cash generation, reporting $1.1 billion in operating cash flow and $953 million in free cash flow for the quarter. Debt reduction totaled roughly $641 million, while $191 million was returned to shareholders through dividends and buybacks.
However, risks remain. Concerns about AI adoption timelines and lofty valuations have crept back into the market, with some analysts questioning whether the rally may have peaked too soon. Seagate's guidance incorporates only a slight impact from existing global tariffs and Middle East tensions, but any escalation in trade costs or supply disruptions could pose headwinds.
Despite these uncertainties, Seagate's strong results are reinforcing the narrative that AI-driven demand is permeating deeper into the technology stack. The next challenge for the company will be maintaining pricing discipline and production tightness as competitors like Western Digital also target the same cloud and enterprise spending.
