NEW YORK, July 28, 2026, 16:58 EDT — Seagate shares climbed after the company reported quarterly earnings that surpassed expectations and highlighted its artificial intelligence strategy aiming for a 50% operating margin.
Shares of Seagate Technology Holdings NASDAQ:STX climbed 6.5% after the close on Tuesday, reaching $796.04. The rise came after the company issued a first-quarter outlook that surpassed analyst expectations, following the end of U.S. regular trading.
Seagate projected fiscal first-quarter revenue at a midpoint of $4.1 billion, exceeding consensus by 9.3%. Its forecast for adjusted earnings surpassed consensus by almost 26%.
The main takeaway for investors is the wider profit gap. A preliminary estimate at the midpoint suggests an incremental non-GAAP operating margin of approximately 92%. This amounts to around $431 million in additional operating profit from $471 million in increased sales.
The company forecasts an operating margin close to 50%, compared with 44.6% in the previous quarter. Revenue is anticipated to increase 13% from the prior period, while adjusted earnings per share are projected to gain approximately 28%.
| Metric | Q4 FY2026 actual | Q1 FY2027 midpoint | Q1 analyst consensus | Midpoint signal |
|---|---|---|---|---|
| Revenue | $3.629 billion | $4.10 billion | $3.75 billion | Up 13.0% sequentially; 9.3% above consensus |
| Adjusted EPS | $5.71 | $7.30 | $5.80 | 27.8% higher sequentially; 25.9% over consensus |
| Non-GAAP operating margin | 44.6% | About 50.0% | Not disclosed | Increase of 5.4 percentage points |
Data reflect company-disclosed non-GAAP figures and midpoint projections. Consensus forecasts were gathered prior to publication.
Revenue for the fourth quarter increased by 48.5% to $3.63 billion, surpassing estimates of $3.49 billion. Adjusted earnings per share were $5.71, compared with the expected $5.09.
GAAP net income rose to $1.29 billion from $488 million. Free cash flow increased to $1.1 billion, a 163% rise compared to the previous year.
Data centers accounted for $2.93 billion, representing 81% of revenue in the quarter. The segment expanded by 57%, and nearline exabyte shipments rose by 43%.
The gap suggests stronger pricing and an improved product mix. A rough metric for revenue per nearline exabyte increased by approximately 10.6% compared to a year ago. Since data-center revenue also covers systems, this metric serves only as a rough guide.
Seagate Chief Executive Dave Mosley pointed to “durable long-term demand for mass capacity storage.” The company reported that most nearline supply has already been allocated through calendar 2028. Customers are pushing their planning out to 2029 and further. Q4 CDN
Mozaic 3+ drives are now deployed with all leading cloud clients. The rollout of Mozaic 4+ is underway at the world’s two biggest cloud providers. Qualification shipments of Mozaic 5+ are scheduled for late 2027.
Seagate strengthened its balance sheet as profits rose. During fiscal 2026, the company reduced gross debt by $1.4 billion. Net leverage decreased to 0.4 times adjusted EBITDA.
Despite the rebound, shares were still down 2.6% from Monday’s close. Losses deepened 8.5% in Tuesday’s session. The earnings report recouped only a portion of that loss.
Risks: The forecast relies on ongoing cloud demand and minimal impact from tariffs. A halt in spending, delays in HAMR implementation, or softer pricing may reduce the anticipated increase in margins.
