Seagate Technology reported fourth-quarter results on July 28 that exceeded analyst expectations across key metrics. The data-storage manufacturer generated revenue of $3.63 billion, representing 49% year-over-year growth, while earnings per share reached $5.71, surpassing the consensus estimate of $5.10. The company’s gross margin expanded to 52.7%, marking the 13th consecutive quarter of margin expansion and reflecting the company’s strong competitive position in the mass-storage sector.
Cloud data center operations emerged as the primary growth engine for Seagate, with data-center revenue climbing 57% year-over-year to $2.9 billion and accounting for approximately 80% of total revenue. Nearline HDD exabyte capacity shipped to hyperscalers grew 43% year-over-year to 195 exabytes, demonstrating robust demand from cloud operators. Conversely, non-nearline HDD exabyte capacity shipped declined 10% year-over-year to 23 exabytes as consumer demand remained subdued.
Financial performance extended beyond earnings, with operating cash flow reaching $3.67 billion for the fiscal year ended July 3, compared to $1.08 billion in the prior year. Free cash flow surged to $3.11 billion from $818 million, while net debt decreased to $1.9 billion from $4.2 billion year-over-year. The company maintained a cash balance of $1.7 billion against short-term debt of $185 million.
Looking ahead, Seagate guided for first-quarter 2027 revenue between $4.0 billion and $4.2 billion, exceeding analyst estimates of $3.8 billion, with earnings per share guidance of $7.10 to $7.50 compared to the consensus estimate of $5.85. The company’s product roadmap includes the Mozaic 5 platform, expected to launch in late 2027 or early 2028 with capacity reaching approximately 50 terabytes per drive. Management noted that the nearline exabyte capacity backlog remained full through calendar 2028 under build-to-order agreements.
Valuation metrics presented a contrasting picture to the fundamental strength. The forward price-to-earnings ratio of 30.1 times, price-to-sales ratio of 15.6 times, and price-to-cash flow multiple of 52.1 times all substantially exceeded sector medians. Among 26 analysts covering the stock, 22 maintained “Strong Buy” ratings, one held a “Moderate Buy” rating, and three maintained “Hold” ratings, with a mean price target of $1,123.52.
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