Seagate Technology Holdings (NASDAQ:STX) saw its shares climb sharply in after-hours trading on Tuesday, July 28, 2026, following the release of fiscal fourth-quarter results that exceeded analyst expectations. The stock rose 6.5% to $796.04, recouping some of the losses from the regular session, as investors reacted positively to the company's robust performance and ambitious profit targets tied to artificial intelligence.
The data storage giant reported fiscal Q4 revenue of $3.629 billion, a 48.5% year-over-year increase that surpassed the consensus estimate of $3.49 billion. Adjusted earnings per share came in at $5.71, well above the expected $5.09. On a GAAP basis, net income more than doubled to $1.29 billion from $488 million in the same period last year, while free cash flow surged 163% to $1.1 billion.
Seagate's outlook for the fiscal first quarter of 2027 was even more striking. The company guided for revenue at a midpoint of $4.10 billion, approximately 9.3% above consensus, and adjusted EPS of $7.30, which beat forecasts by nearly 26%. This guidance implies a sequential revenue increase of 13% and an adjusted earnings jump of about 28%.
The highlight for many investors was the company's margin trajectory. Seagate projected a non-GAAP operating margin close to 50% for the current quarter, up from 44.6% in the prior quarter. The incremental non-GAAP operating margin on the additional revenue is estimated at roughly 92%, translating to about $431 million in extra operating profit from $471 million in incremental sales. This suggests strong pricing power and an improving product mix.
Data center revenue remained the primary growth engine, accounting for $2.93 billion or 81% of total Q4 revenue. This segment expanded 57% year over year, with nearline exabyte shipments rising 43%. Seagate's revenue per nearline exabyte increased by approximately 10.6% compared to a year ago, reflecting favorable pricing dynamics.
CEO Dave Mosley highlighted the "durable long-term demand for mass capacity storage," noting that most nearline supply is already allocated through calendar 2028, with customers extending their planning horizons to 2029 and beyond. The company's Mozaic 3+ drives are now deployed with all leading cloud clients, while Mozaic 4+ is being rolled out at the world's two largest cloud providers. Qualification shipments of Mozaic 5+ are scheduled for late 2027.
Seagate also strengthened its balance sheet during fiscal 2026, reducing gross debt by $1.4 billion and lowering net leverage to 0.4 times adjusted EBITDA. Despite the positive news, the stock remained down 2.6% from Monday's close and had fallen 8.5% in Tuesday's regular session before the after-hours rebound.
Key risks to the outlook include potential slowdowns in cloud spending, delays in HAMR (heat-assisted magnetic recording) technology implementation, or softer pricing that could reduce the anticipated margin expansion. The forecast also assumes minimal impact from tariffs.
