STX Stock Forecast & Price Target

Seagate Technology Holdings has demonstrated robust financial performance, with Data Center revenue reaching $2.1 billion, representing a significant 34% year-over-year increase and now constituting 80% of total revenue, driven largely by strong demand from hyperscale cloud providers. The company's operating margin has improved markedly, rising 280 basis points quarter-over-quarter to 29%, while non-GAAP gross margin hit a record 40.1%, reflecting efficient operations amidst strong cloud and enterprise demand. With the successful rollout of the HAMR Mozaic platform and accelerating qualifications among key cloud service providers, Seagate is positioned for sustained growth well into FY27, indicating a positive trajectory for its market position and financial health.

Seagate Technology Holdings is experiencing a notable decline in its Edge/IoT segment, with revenues falling to $515 million, marking an 11% sequential and 12% year-over-year decrease, indicative of weaker consumer and client demand in a challenging market environment. Despite a stable gross debt of $5 billion and a reduction in net leverage from 1.8x to 1.5x, the overall performance raises concerns as downward trends in key segments may hinder future growth prospects. While management's strategic focus on inventory control and cost management provides some stability, reliance on seasonal improvements in consumer products does not adequately address the underlying demand challenges.