Off The Call: STX (+3%)...

Research evidence excerpt

Off The Call: STX (+3%)...

Specialist Sales J P M O R G A N

28 July 2026

Joshua Meyers

+1 617 310 0767

joshua.meyers@jpmorgan.com

Another beat and raise quarter, and a spirited call with good incremental color - on which I haven’t yet heard any meaningful

nitpicks. HDDs are broadly well-loved, and positiniong in STX in particular has been high, leading some folks to get short into

the print (the likely catalyst for the initial fade in the after-market; though it was the DRAM print that ultimately took the stock

lower). Similar to yesterday’s CLS print, there was a lot to like here, but the broader market may continue to weigh on the name.

Key highlights from the call:

• 13th consecutive GM growth quarter. 31% FCF margin.

• Given momentum & improved visibility into demand, they expect F27 revenue growth > F26!

• Demand supported by cloud customers’ demand for data storage solutions amplified by the adoption of AI-enhanced

applications. “Looking ahead to fiscal 2027, we expect to deliver sequential margin and cash generation growth throughout

the year. Our confidence is supported by the scale, quality, and duration of our data center customer commitments, and a

strengthening demand environment.”

• Exiting the year, HAMR-based products represented ~40% of Nearline exabyte shipment run rate.

• Importantly, they are not seeing customers pull back on planning horizons; many are actually actively seeking to extend

planning horizons through 2029 and beyond.

• Cloud customers remain the largest driver for nearline demand today, with three years of sequential, quarterly exabyte growth

and no evidence of a slowdown, as AI adoption now builds on demand for traditional data-intensive applications, including

video.- which needs to be retained.