STX FQ4‘26: This ain‘t over... Raising estimates and TP to $1350; Reiterate Outperform, Top Long-term pick

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STX FQ4‘26: This ain‘t over... Raising estimates and TP to $1350; Reiterate Outperform, Top Long-term pick

Mark C. Newman +1 212 845 7822 mark.newman@bernsteinsg.com 29 July 2026

DETAILS

Yesterday after market close, Seagate reported strong FQ4’26 earnings. Stock was up 7% post market at time of writing.

Seagate again delivered a strong quarter with sweeping beats in revenue, margin, EPS and guidance.

• Revenue: Seagate posted $3.63bn (Cons: $3.49bn, Bern: $3.46bn) revenue in FQ4’26, up 16.6% sequentially and 59.1%

yoy.

• Margin: Seagate achieved a record non-GAAP gross margin of 52.7% (Cons: 50.4%, Bern: 50.9%), expanded by 570

basis points sequentially. Operating expenses totaled $293mn. The non-GAAP operating margin expanded by 710bps

sequentially to 44.6% (Cons: 41.8%, Bern: 42.4%).

• FCF: Q4’26 FCF reached $1,118mn, increasing by 17% sequentially. Q4 Capex was $187mn (5.2% of revenue), with full

year Capex expected to stay within the 4-6% of revenue target range.

• EPS: Adjusted EPS came in at $5.71, well-above the high end of the guided range ($4.80-$5.20), beating both our estimate

at $5.07 and consensus at $5.08.

FQ1 FY27: Revenue guided to $4.1bn, +/- $100 mn (+56% yoy at midpoint), operating margin approximately 50%, and EPS

of $7.30, +/- $0.20, significantly above cons at $5.97. The higher guidance reflects robust demand, pricing strength, and

continued operating leverage.

FY27 and beyond: Following 34% revenue growth in FY26, management expects continued revenue and margin improvement

through FY27, with cash generation also improving over the year. Capacity is largely allocated through CY27, with visibility into

CY28 and planning discussions extending into CY29. Seagate reiterated mid-20% multiyear nearline EB growth, supported