Seagate Technology | North America F4Q26 Earnings – Differentiating From The Pack

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Seagate Technology | North America F4Q26 Earnings – Differentiating From The Pack

IdeaM52.7% reported GM). And while expectations coming into earnings tonight were

high, the Sept Q EPS guide of $7.30 was well-above buyside expectations (and 25%

above Consensus), especially considering STX has beat their EPS guide by 70c each

of the last 2 quarters. Given these factors, we can't help but believe that once

broader market concerns are addressed / de-grossing in AI capex names subsides,

STX/HDDs will be the first to catch a bid. Post-earnings we now model CY27 EPS of

$59.33 (bull case of $75.70) and CY28 EPS of $91.93 (and bull case of $137.73),

which on an unchanged 20x P/E multiple, supports our new $1,187 PT ($1,665 bull-

case valuation). STX remains our Top Pick in IT Hardware.

What we learned from F4Q26 earnings/conference call/callback:

(+) Demand trends continue to strengthen and broaden, improving the durability

of growth/margin expansion. The most important takeaway from the call, in our

view, is that STX’s demand visibility is not only extending, but also broadening

across use cases and customer types. Mgmt now sees the vast majority of nearline

EBs allocated into CY28, vs. “through CY27” last quarter, and customers are

increasingly trying to extend planning horizons into 2029 and beyond. STX is seeing

demand from existing cloud and enterprise infrastructure, higher data retention/

reuse, agentic AI workloads that require more persistent context, and early signs of

incremental demand from neoclouds, model developers, robotics/autonomous

systems, and other physical AI applications. In other words, AI is becoming a larger

demand driver, where more unstructured data is created, stored, reused, and

monetized over time.