Seagate Technology Holdings plc (NASDAQ: STX) saw its shares surge approximately 10% in after-hours trading on Tuesday, following the release of fiscal third-quarter results that exceeded Wall Street expectations and an upbeat revenue forecast for the current quarter. The company attributed the strong performance to robust demand for high-capacity hard-disk drives (HDDs) used in artificial intelligence data centers.
For the fiscal third quarter ended April 3, 2026, Seagate reported revenue of $3.11 billion, a sharp increase from $2.16 billion in the same period last year. Adjusted earnings came in at $4.10 per share, surpassing analyst consensus estimates of $3.51 per share (per FactSet) and $3.50 per share (per Zacks). On a GAAP basis, earnings were $3.27 per share.
The company's guidance for the fiscal fourth quarter was particularly striking. Seagate expects revenue of approximately $3.45 billion, plus or minus $100 million, and adjusted earnings of $5.00 per share, plus or minus $0.20. This compares to Wall Street forecasts of $3.16 billion in revenue and adjusted EPS of $3.97, according to LSEG data cited by Reuters.
The after-hours rally reversed a 2.8% decline during the regular session, where shares closed at $579.03. The move added to what has already been an extraordinary run for the stock, which has more than doubled year-to-date following a more than threefold surge in 2025.
Seagate's results underscore a significant shift in AI infrastructure spending. While much of the initial focus has been on semiconductor demand, the industry is now recognizing the critical need for massive data storage capacity. AI workloads generate enormous volumes of data, including training datasets, model outputs, and system logs, which require cost-effective bulk storage solutions. HDDs, with their lower cost per terabyte compared to flash-based alternatives, are well-positioned to capture this demand.
Chairman and CEO Dave Mosley highlighted the company's "record margin performance" and said Seagate is entering a "new era of structural growth" driven by AI-induced data creation. Management emphasized that higher-capacity drives and increased areal density—packing more data onto each disk surface—are key drivers of efficiency gains.
Cash generation was also a highlight. Seagate reported operating cash flow of $1.1 billion and free cash flow of $953 million. The company used $641 million to repay debt and returned $191 million to shareholders through dividends and share buybacks.
The strong results and outlook put additional pressure on Western Digital Corporation (NASDAQ: WDC), Seagate's primary competitor in the HDD market. Both companies are competing for contracts with major cloud providers as demand for data storage hardware accelerates.
However, Seagate's outlook is not without risks. The company's guidance assumes only minimal disruption from global tariffs and geopolitical tensions in the Middle East, but it cautioned that actual outcomes could differ. Potential headwinds include a faster-than-expected decline in AI demand, price erosion, or an influx of new capacity that could compress margins.
