STX Stock: Data Center Demand Drives Sea Change at Seagate

A top player in the data storage market since the 1980s, Seagate Holdings [STX] is a US company with an international footprint. While its operational headquarters are in Fremont, California, it is domiciled in Dublin and has international headquarters in Singapore. 

The company developed the first hard disk drive (HDD) products in the early 1980s and continues to be a leading firm in the HDD market, accounting for 40% in Q1 2025. 

While STX stock seems to be having a bumper year in 2025, the company’s prospects are closely connected to macroeconomic headwinds and tailwinds — most notably, US tariffs and artificial intelligence-driven (AI) growth in data centers. 

Off the back of strong quarterly and fiscal year earnings in late July, we examine what the months ahead could hold for Seagate Holdings. 

A Stellar 2025 and New Products

Seagate announced Q4 and FY 2025 earnings on July 29, beating analyst estimates with quarterly EPS of $2.59 and quarterly revenue of $2.44bn. Revenue for 2025 rose 39% year-over-year to $9.10bn, with the company recording a record gross margin of 35.2%. These strong results reflect structural changes in the company, as well as demand from cloud customers, according to CEO Dave Mosely, who referred to FY 2025 as “one of the most profitable fiscal years in the company’s long-storied history”.

Seagate has forecast revenue of $2.35bn–2.65bn for Q1 2026, with both tax impacts and tariff impacts taken into consideration. 

Seagate’s historic market lay in memory hardware for computers; however, it is repositioning to cater to hyperscalers, with drives designed to meet the needs of data centers used to train AI models.

At the end of March, Seagate completed its $119m all-cash acquisition of hard drive equipment producer firm Intevac. Intevac is a specialist in heat-assisted magnetic recording (HAMR) technology, which improves the storage density of hard drives through the application of heat. Seagate launched its first HAMR solution in two decades in December 2024, beating competitors Western Digital [WDC] and Toshiba [TSHTY] to market with a technology that boasts a cost advantage over solid state drives (SSDs) and is seeing increased demand from data centers.

In January 2025 Seagate launched its Exos M hard drive, which utilizes HAMR technology, boasts storage capacities up to 36TB and is intended for “for large-scale data center deployments”.

STX at Record Highs

STX’s share price is riding high, hovering around an all-time peak of $158.11 on August 18. The stock recovered from a deep trough in early April, seemingly prompted by tariff concerns, and has continued surging well above historic levels. Shares have traded somewhat flat since early July, with the most recent earnings release seeing a slight pullback as investors reacted to a softer-than-expected outlook for Q1 2026.

As of August 19, STX stock is up 85.45% in the year to date, and up 59.59% in the past 12 months. 

Key Competitors

San Jose-headquartered Western Digital is the other top player in the HDD market, representing 42% of the market in Q1 2025. It produces data storage hardware for both consumer and data center markets. 

The firm announced Q4 and FY 2025 results at the end of June, logging quarterly revenue of $2.61bn and yearly revenue of $9.52bn, up 30% and 51% year-over-year, respectively. It reported free cash flow of $675m and engaged in a $2bn share repurchase program and a debt reduction of $2.6bn during the quarter, underlining its strong fundamentals. Western Digital also projected revenue growth of 22% in Q1 2026, with CEO Irving Tan proclaiming that “HDDs will continue to remain the foundation of the world’s data infrastructure, delivering unmatched value for mass storage in an AI-driven future.” 

Boise, Idaho-based Micron Technology also designs, manufactures and sells memory and storage hardware, although it outstrips both Seagate and Western Digital in terms of size and customer base, creating products for gaming, automotive and handheld applications alongside data centers and consumer embedded markets. 

For Q3 2025 the company reported a record $9.3bn revenue, up 37% year-over-year, with revenue, EPS and gross margin all beating guidance. This strong performance was driven by a two-fold increase in data center revenue and record sales of Micron’s dynamic access random memory products.

Source: Yahoo Finance

Of the three, Micron appears to be the most expensive, but also offers impressive growth forecasts for the coming years. Western Digital is the cheapest but also lags in size and growth prospects, while Seagate trades at a slightly higher premium while offering more consistent growth. 

STX Stock: The Investment Case

The Bull Case for Seagate

Thanks to a number of product launches, the company is undergoing a key repositioning, with its historic focus on PCs and other consumer devices shifting to cater to new demand from data centers. Its HAMR drive technology is at the center of this push, with sales of its HAMR-enabled Mozaic 3+ drive helping the company overcome a two-year slump. 

Following June earnings, Morgan Stanley increase its price target on STX stock from $167 to $168, representing an upside of 6.38% from the August 19 close price. Goldman Sachs retained its ‘buy’ rating and price target of $170, citing the market opportunity in HAMR production. 

Wedbush also reiterated its ‘outperform’ rating and $175 price target, with analyst Matt Bryson concluding that, “with margin and revenue momentum seemingly continuing into CQ3 (particularly if we are correct and STX again guided conservatively), and with HAMR progress continuing, we see no reason to shift our constructive view on the name.”

The Bear Case for Seagate

While its financials seem to be improving, Seagate’s sales remain well below its 2012 peak of $14.9bn, with SSD products eating into demand for its laptop and PC HDD products. 

It is also important to note that all HDDs and most of their key components are manufactured outside of the US. In April, following the announcement of sweeping US tariffs, Forbes noted that, without exemptions, tariffs would drive price increases “for all types of memory and storage technology”. 

Seagate management has been cautious and offered conservative guidance for Q1 2026. If tariffs eat into Seagate’s profits — or if a competitor such as Western Digital is able to launch a comparable HAMR product in the near term — STX stock could suffer. Of the 23 analysts surveyed by Yahoo Finance in August, seven gave the stock a ‘hold’ rating, and one gave it an ‘underperform’ rating.

Conclusion

Strong financials and new product launches appear to be pulling Seagate out of an extended sales slump, with STX shares soaring as a result. As the firm repositions to build drives for the data centers supporting the AI boom, it remains to be seen if Seagate can maintain a convincing market lead and overcome tariff-related headwinds.