Seagate draws mixed analyst calls after 590% one-year surge

Seagate Technology has drawn a split on Wall Street after its 590% rally, with analysts divided on whether the stock can sustain its AI-driven gains.

"Seagate is entering a new era of structural growth as AI applications amplify data creation and support sustained storage demand," Chief Executive Officer Dave Mosley said.

The company reported Q3 FY2026 revenue of $3.11 billion, up 44% from a year earlier, with data center revenue jumping 55% to $2.5 billion. Non-GAAP gross margin reached 47%, and management guided Q4 revenue to $3.45 billion with EPS of $5. Seagate raised its minimum annual revenue growth target to 20%, with nearline capacity allocated through calendar 2027.

Shares trade at $968.53, about 22% below the 52-week high of $1,144.18. The 24/7 Wall St. price target of $910.77 implies a 6% downside, though Mizuho lifted its target to $1,090 and Morgan Stanley to $1,035 on a multi-year HDD shortage thesis.

Fox Advisors downgraded Seagate to Equal-Weight on June 27, citing overly optimistic HDD pricing assumptions. The downgrade came as insider activity shifted to net selling across 197 transactions. Melius Research initiated coverage with a Buy rating on June 29, projecting 55% upside. The bull case, driven by Mozaic 4 HAMR technology reaching 70% of nearline exabyte shipments by fiscal 2027, points to $1,200.63. The bear scenario, reflecting valuation compression and pricing risk, targets $674.57.

Seagate retired $641 million in debt last quarter and earned a Fitch upgrade to investment grade. The top three cloud providers hold $1.1 trillion in remaining performance obligations, supporting management's view that demand will remain strong through at least calendar 2027.

The mixed analyst reception signals that the stock's valuation has caught up with its fundamental momentum. Investors will watch the Q4 FY2026 earnings report for continued margin expansion and any update on HAMR adoption timelines.

This article is for informational purposes only and does not constitute investment advice.