Seagate Stock Jumps as AI-Fueled Earnings Beat and Strong FY2027 Outlook Impress Investors

Seagate Technology (NASDAQ: STX) shares climbed 7.4% in after-hours trading on Tuesday after the data storage company reported stronger-than-expected fiscal fourth-quarter earnings and revenue, driven by surging demand for AI infrastructure and cloud storage solutions.

For the quarter, Seagate posted adjusted earnings of $5.71 per share on $3.6 billion in revenue, exceeding Wall Street expectations of $5.09 per share and $3.5 billion in revenue. The company’s quarterly revenue increased 49% year over year from $2.4 billion, reflecting continued investment by hyperscale cloud providers and enterprise customers expanding data center capacity to support artificial intelligence workloads.

Profitability also improved significantly. Seagate’s non-GAAP gross margin rose to 52.7%, up from 37.9% a year earlier, highlighting stronger operational efficiency and a more favorable product mix.

Looking ahead, the company issued an optimistic forecast for the first quarter of fiscal 2027. Seagate expects revenue of $4.1 billion, plus or minus $100 million, and non-GAAP diluted earnings of $7.30 per share, plus or minus $0.20. The outlook surpassed analysts’ expectations of $3.8 billion in revenue and $5.87 in earnings per share, reinforcing confidence in the company’s growth trajectory.

CEO Dave Mosley said long-term demand for cloud storage and rising global data generation continue to support the business. He also emphasized Seagate’s proprietary Mozaic platform and Heat-Assisted Magnetic Recording (HAMR)technology as key competitive advantages that position the company to benefit from increasing AI-related storage needs.

For fiscal 2026, Seagate generated $12.2 billion in revenue and reported non-GAAP diluted earnings of $15.58 per share, marking substantial improvements from the previous fiscal year. The company also delivered record cash generation, producing $3.7 billion in operating cash flow and $3.1 billion in free cash flow.

Strong cash flow enabled Seagate to strengthen its balance sheet by retiring $1.4 billion in debt during the fiscal year, including $302 million in the fourth quarter. The company ended the year with $3.6 billion in total debt, $1.7 billion in cash and cash equivalents, and maintained its quarterly dividend of $0.74 per share, underscoring its commitment to returning value to shareholders.