Seagate (STX): Assessing Valuation as AI Data Center Growth Puts Storage Leader in the Spotlight

Seagate Technology Holdings (STX) is back in focus after new coverage highlighted its expanding presence in the AI data center market. Investors are watching closely as demand for large-scale and energy-efficient storage takes off.

See our latest analysis for Seagate Technology Holdings.

Recent weeks have seen Seagate’s share price soar, reflected in a remarkable 178% year-to-date price return, as investors have responded to its growing AI data center footprint and notable events like executive appointments and a major debt exchange. This surge in momentum continues a multi-year story of outperformance, with the five-year total shareholder return now approaching 389%, which is clear evidence of the company’s staying power in data-centric tech markets.

Curious which other tech and AI innovators are riding the wave of industry growth? The next move might be waiting on our shortlist: See the full list for free.

With investor enthusiasm and recent gains already running high, the key question remains: is Seagate still undervalued given its AI momentum, or are markets fully pricing in all the future growth ahead?

Most Popular Narrative: 13.3% Undervalued

Seagate’s most widely followed narrative places its fair value estimate comfortably above the latest close, suggesting the market is missing something vital about its future growth. The current price leaves a notable margin to the upside, justified by robust sector momentum and breakthrough technology bets.

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.

Read the complete narrative.

Think earnings growth is already priced in? This narrative peels back the curtain to reveal bullish assumptions about future profit margins and revenue expansion. Dare to see what financial leaps drive the case for a higher fair value? Choose to get the full picture now.

Result: Fair Value of $277.25 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing supply constraints or changes in global trade policies could quickly alter the trajectory for Seagate’s projected growth and profitability.

Find out about the key risks to this Seagate Technology Holdings narrative.

Another View: Market Multiples Offer a Mixed Message

Taking a look at Seagate’s valuation through the lens of its price-to-earnings ratio reveals some tension. The company trades at 30.6x earnings, which is well above the global tech industry average of 22.2x and even peers at 60.1x. However, this is still notably below the fair ratio of 40.7x, indicating there is still a valuation gap the market could close or widen. What if the crowded optimism in AI storage leads to volatility before multiples ever catch up?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Seagate Technology Holdings Narrative

Want to fit the facts to your own outlook? Dive into the numbers and craft a personalized Seagate story yourself in just a few minutes. Do it your way

A great starting point for your Seagate Technology Holdings research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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