Last Update 09 Dec 25

Fair value Increased 0.75%

STX: AI Storage Demand And Tight Supply Will Support Durable Upside

Analysts increased their price target for Seagate Technology Holdings by roughly $2 per share. This reflects growing confidence in structurally tight HDD supply, sustained nearline demand from AI infrastructure buildouts, and management's disciplined capacity additions that support higher long term pricing and margins.

Analyst Commentary

Recent Street research reflects a broadly constructive view on Seagate, with multiple firms lifting price targets in response to improving fundamentals in the hard disk drive market and growing AI related storage demand. The tone of commentary is skewed positive, though some voices are flagging late cycle and valuation risks.

Bullish Takeaways

Bullish analysts highlight structurally tight HDD supply and extended lead times for high capacity drives, supporting higher average selling prices and margin expansion, which underpins higher valuation multiples.
Several research notes point to accelerating AI and cloud infrastructure spending as a durable, multi year driver of nearline demand, with exabyte shipment forecasts being revised upward and room for further upside.
Commentary emphasizes management's rational approach to capacity additions and strong execution on pricing, with a clear path toward 40 percent plus gross margins and incremental margins above 50 percent at higher revenue run rates.
Improving visibility into HAMR adoption and the ramp in next generation drive shipments are seen as catalysts for mix improvement, earnings upside, and further multiple re rating as investors gain confidence in the technology roadmap.

Bearish Takeaways

Bearish analysts remain cautious on valuation sustainability, warning that as head capacity and industry supply eventually rise, investors could compress earnings multiples even if absolute earnings continue to grow.
Some research notes flag the potential for a cyclical downturn beyond 2026 as AI driven buildouts normalize, raising questions about the durability of current pricing power and peak margin assumptions embedded in higher targets.
There is concern that limited upside versus consensus in near term quarters, especially in the absence of meaningful unit growth, could constrain share performance if expectations have already moved ahead of fundamentals.
A minority view stresses that despite recent price target increases, risks around industry volatility, macro driven IT budget swings, and competition from alternative storage technologies could cap further re rating from current levels.

What's in the News

Updated share repurchase activity shows Seagate bought back 200,000 shares for $38.08 million between June 28 and October 3, 2025, bringing total repurchases under its November 2018 authorization to 81.63 million shares, or 33.54 percent of shares outstanding, for $5.37 billion (company filing).
The company issued new guidance for its fiscal second quarter ending January 2, 2026, projecting revenue of $2.70 billion, plus or minus $100 million, and noting estimated impacts from the Pillar Two global minimum tax framework, exchangeable senior notes due 2028, and minimal effect from current global tariff policies (company guidance).
Seagate's board approved a quarterly cash dividend increase to $0.74 per share, payable January 9, 2026 to shareholders of record on December 24, 2025, reinforcing the company's shareholder return focus (company announcement).

Valuation Changes

The fair value estimate has risen slightly to $289.24 from $287.10, reflecting a modest uplift in the intrinsic value assessment.
The discount rate has fallen marginally to 7.97 percent from 8.00 percent, implying a slightly lower required return and modestly higher valuation support.
Revenue growth has increased slightly to 13.55 percent from 13.28 percent, indicating a small upward revision to top line expectations.
The net profit margin has edged down slightly to 25.11 percent from 25.29 percent, suggesting a minor reduction in long term profitability assumptions.
The future P/E has risen slightly to 22.69x from 22.54x, indicating a modestly higher multiple applied to forward earnings.

Seagate's technological advancements and growing demand for mass capacity storage are projected to boost revenue and expand operating margins.
Strategic actions like pricing and manufacturing shifts enhance profitability, while agreements with key customers ensure revenue visibility.
Rising competition, tax changes, and debt levels pose significant threats to Seagate’s market position, impacting revenue, margins, and profitability.

Catalysts

About Seagate Technology Holdings

Engages in the provision of data storage technology and infrastructure solutions in Singapore, the United States, the Netherlands, and internationally.What are the underlying business or industry changes driving this perspective?

Seagate is ramping up its HAMR-based Mozaic drives, which represent a technological breakthrough. The transition to these drives is expected to lead to sustained and profitable growth, impacting both revenue and net margins positively.
The growing demand for mass capacity storage driven by the cloud CapEx investment cycle and data center build-outs for AI transformation is likely to elevate Seagate's revenue streams. This increased demand aligns with ongoing cloud infrastructure expansion, suggesting positive impacts on earnings.
Seagate's strategic pricing actions and its build-to-order strategy enhance its financial predictability and profitability, reflecting in expanding operating margins and improved earnings visibility.
Ongoing agreements with large cloud and hyperscale customers indicate strong nearline exabyte demand, providing revenue visibility into calendar year 2026. The expected sequential revenue growth supports earnings growth projections.
The company's operational agility and strategic adjustments, like potential geographic manufacturing shifts, are expected to mitigate risks associated with trade policies. This focus on managing controllable factors is likely to sustain or even increase operating margins and free cash flow.

Seagate Technology Holdings Earnings and Revenue Growth

Seagate Technology Holdings Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Seagate Technology Holdings's revenue will grow by 9.5% annually over the next 3 years.
Analysts assume that profit margins will increase from 16.1% today to 21.1% in 3 years time.
Analysts expect earnings to reach $2.5 billion (and earnings per share of $11.7) by about September 2028, up from $1.5 billion today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 18.0x on those 2028 earnings, down from 25.5x today. This future PE is lower than the current PE for the US Tech industry at 21.8x.
Analysts expect the number of shares outstanding to grow by 0.54% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.1%, as per the Simply Wall St company report.

Seagate Technology Holdings Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Trade policy uncertainties, such as tariff measures, could affect customer buying decisions and may impact future revenue if not managed properly.
Temporary supply constraints and operational issues, as experienced in the March quarter, can limit revenue and impact profitability forecasts if they persist.
Significant debt levels, despite recent reductions, could constrain financial flexibility and affect net margins if cash flow generation declines or interest rates rise.
The expansion of competing technologies, like SSDs and QLC NAND, may enhance competitive pressure and impact Seagate's market share, potentially affecting revenue and margins.
Future tax changes, including the adoption of Pillar 2 global minimum tax, could increase tax expenses and reduce net earnings starting in fiscal 2026.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $166.421 for Seagate Technology Holdings based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $200.0, and the most bearish reporting a price target of just $80.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $12.0 billion, earnings will come to $2.5 billion, and it would be trading on a PE ratio of 18.0x, assuming you use a discount rate of 8.1%.
Given the current share price of $176.32, the analyst price target of $166.42 is 5.9% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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