Seagate Technology just gave the AI infrastructure business a much-needed win, and it came from hard drives, an unexpected corner of the market.
Seagate shares fell nearly 8% in Tuesday print as investors soured on AI valuations stretching across chip and storage names. However, Seagate’s fourth-quarter financial results upended that mood almost overnight.
A win that silences the doubters
profit Up 48% year over year to $3.63 billion, exceeding Wall Street estimates of close to $3.5 billion. Non-GAAP earnings per share were $5.71, well above analysts’ expectations of $5.10.
This gap is important because it shows that Seagate isn’t just selling more drives. They make a lot more profit from each one. Non-GAAP gross margin supported this increase, jumping to 52.7% from 37.9% a year earlier.
Seagate also had a record free cash flow of $3.1 billion for the full fiscal year, cash it can use to pay down debt, reward shareholders or reinvest in its AI storage campaign.
CEO Dave Mosley attributed the results to persistent cloud demand.
“Our performance is driven by strong demand for cloud data centers and disciplined execution, and we see momentum continuing into 2027.” Mosley He said.
Management’s guidance has also exceeded expectations. Seagate expects revenue of $4.1 billion next quarter, well above analyst estimates of closer to $3.8 billion.
Why it matters goes beyond storage
The tempo lands just right Memory chip stocks fluctuate Due to concerns about overheating of the AI build. until SK Hynix and Samsung chipset deals Didn’t stop that chip. Seagate’s results suggest that fundamental demand for AI-based data storage remains, even as sentiment around the stock is shaken.
Seagate’s next quarter, and whether it meets the $4.1 billion target, will show whether that confidence remains.
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