STX Stock Forecast & Price Target

Seagate Technology Holdings has demonstrated significant growth in its Data Center segment, with revenue reaching $2.1 billion, marking a 34% year-over-year increase and accounting for 80% of total revenue, driven by robust demand from hyperscale cloud providers. The company reported a strong first quarter with overall revenue of $2.63 billion, up 21% year-over-year, and improved operational efficiency reflected in a non-GAAP gross margin of 40.1%. The momentum from the company's HAMR Mozaic platform, alongside rapid adoption by major cloud service providers, suggests a sustained market up-cycle extending into fiscal year 2027, reinforcing a positive outlook for Seagate’s financial performance.

Seagate Technology Holdings faces a negative outlook primarily due to a significant decline in its Edge/IoT segment, which decreased to $515 million, reflecting an 11% quarter-over-quarter and 12% year-over-year drop driven by softer consumer and client demand. Despite a stable gross debt level of $5 billion and a slight reduction in net leverage to 1.5x, the overall financial health is challenged by this weakened demand; even though higher Nearline mix and increased average drive capacity supported exabyte growth, such positives cannot offset the underlying downturn. Furthermore, while the non-GAAP EPS of $2.61 exceeded prior guidance and expectations, the reliance on a build-to-order strategy signals constricted inventory practices that may limit revenue growth potential in the near term.