A Storage and Computing Leader with Meteoric Growth Expected to Continue

Seagate Technology is expected to continue its meteoric growth due to increasing demand for data storage and computing solutions. The company’s leading position in the market, combined with its strong product portfolio and innovative technology, make it an attractive investment opportunity. Despite its growth, Seagate still offers a good entry point for investors looking to buy into the stock.

Seagate Technology Holdings plc (STX) announced plans to resume share buybacks in the September quarter, underscoring its confidence in the financial strength and outlook following a strong fiscal 2025 performance [1]. In fiscal 2025, revenues were $9.1 billion, up 39% year over year, driven by robust nearline demand from cloud customers. A key driver of Seagate’s growth is the ongoing implementation and expansion of its HAMR technology, aimed at increasing areal density and supporting next-generation storage solutions. These technological advances are crucial for meeting the increased demand for high-capacity storage in hyperscale data centers, AI training workloads, and decentralized edge environments. Non-GAAP operating profit more than tripled to $2.1 billion in fiscal 2025.

Free cash flow in the fiscal fourth quarter was $425 million, driven by robust top-line growth and disciplined capital expenditures of 3% of revenues, below the long-term target range of 4-6%. Annual free cash flow was $818 million. STX expects cash generation to expand in the back half of calendar 2025, even with a large variable compensation payout in the current quarter. Further, structural changes and a robust product pipeline are expected to drive higher profitability and cash generation in fiscal 2026.

With profitability trending higher and mass capacity storage demand accelerating, the company appears well-positioned to balance growth with meaningful capital returns, thereby enhancing shareholder value in fiscal 2026 and beyond. In fiscal 2025, the company distributed nearly 75% of free cash flow through dividends, while paying down gross debt of about $150 million in the fiscal fourth quarter.

Seagate’s presentation at the Citi’s 2025 Global TMT Conference underscored its strategic focus on growth, innovation, and shareholder value. The company aims for sequential revenue and profitability growth each quarter, driven by AI and ML technologies. Seagate is committed to share buybacks and potential dividend increases. While facing potential tariff challenges, its focus on innovation remains strong [2].

In the past month, shares have gained 9.6% against with the Zacks Computer Integrated Systems industry’s decline of 3.5%. In terms of forward price/earnings, STX’s shares are trading at 15.58X, lower than the industry’s 19.97X. The Zacks Consensus Estimate for STX’s earnings for fiscal 2026 has been revised up 4.2% to $10.30 over the past 60 days.

Seagate Technology is expected to continue its meteoric growth due to increasing demand for data storage and computing solutions. The company’s leading position in the market, combined with its strong product portfolio and innovative technology, make it an attractive investment opportunity. Despite its growth, Seagate still offers a good entry point for investors looking to buy into the stock.

References:
[1] https://www.theglobeandmail.com/investing/markets/stocks/STX/pressreleases/34454779/seagate-resumes-buybacks-amid-rising-free-cash-flow-momentum/
[2] https://www.investing.com/news/transcripts/seagate-at-citis-2025-global-tmt-conference-strategic-growth-focus-93CH-4222445