Seagate Stock Escapes Memory Rout: Now BofA Says It Could Rip 54% Higher

Seagate Technology Holdings plc (NASDAQ: STX ) spent much of July collapsing alongside the broader memory and storage complex, falling more than 30% from its June high as investors questioned whether the artificial intelligence infrastructure boom had already peaked.

Now, the company is attempting to climb out of the water.

Seagate reported fiscal fourth-quarter results Tuesday after the closing bell, delivering adjusted earnings of $5.71 per share, up about 120% year over year and well above Wall Street’s $5.10 estimate.

Revenue climbed 48% to $3.63 billion, topping analysts’ expectations of roughly $3.5 billion.

The report also included stronger-than-expected guidance.

The company also issued stronger-than-expected guidance, forecasting fiscal first-quarter revenue of approximately $4.1 billion and adjusted earnings of $7.30 per share, both above consensus.

Bank of America analyst Wamsi Mohan reiterated a Buy rating and maintained a $1,150 price objective, implying 54% upside from Tuesday’s closing price of $747.30.

Mohan said Seagate’s investment case rests on “secular demand from cloud, continued pricing and margin improvement,” while highlighting the company’s transition toward higher-capacity HAMR hard drives.

Seagate shares were up 1.5% by 10:30 a.m. trading in New York.

Meanwhile, peers — as tracked by the Roundhill Memory ETF (NYSE: DRAM ) — were still down 2.7%, pressured by the SK Hynix Inc. (NASDAQ: SKHY ) ‘s earnings miss.

SanDisk Corp. (NASDAQ: SNDK ) has now dropped over 55% from June highs.

Wall Street Was Pricing An AI Slowdown The report stands in sharp contrast to the narrative that has dominated the storage sector over the past month.

Memory and storage stocks have sold off aggressively following China’s ChangXin Memory Technologies blockbuster IPO and fears that Chinese competition could eventually pressure industry pricing.

Investors have also questioned whether hyperscalers might begin slowing AI infrastructure spending after an extraordinary investment cycle.

Seagate’s results point in the opposite direction.

Read Also: SK Hynix Just Had Its Best Quarter Ever: The Stock Is Down 53% From Peak Customers Are Booking Capacity Years In Advance Mohan noted that build-to-order contracts now extend through the end of fiscal 2027, with the vast majority of Seagate’s nearline exabyte capacity already allocated into calendar 2028.

Customers are also extending planning horizons into calendar 2029 and beyond, giving Seagate unusually strong visibility into future demand.

Pricing remains another powerful tailwind.

Mohan said Seagate generated 83.2% year-over-year incremental gross margin during the fourth quarter, while first-quarter guidance implies roughly 88% incremental gross margin.

He also noted management’s view that “the supply/demand gap has widened,” with production above contracted volumes selling at even higher prices.

Management Sees AI Demand Strengthening, Not Slowing Chief Executive Officer Dave Mosley struck an equally optimistic tone on the earnings call, saying demand for mass-capacity storage is “strong and growing,” fueled by hyperscalers building AI infrastructure.

He added that Seagate expects fiscal 2027 revenue growth to exceed the 34% increase delivered in fiscal 2026.

Mosley also revealed that approximately 90% of Seagate’s exabyte shipments now go to data-center customers, with most nearline capacity already committed into calendar 2028.

Rather than reducing orders, customers are increasingly looking to secure supply into 2029 and beyond.

The Bigger AI Story Is Data, Not Chips Perhaps the most important takeaway wasn’t about hard drives.

Mosley indicated that AI is fundamentally changing how data is created, retained and reused.

As workloads evolve from model training to inference, agentic AI and eventually physical AI, organizations will need to store exponentially larger datasets.

That, Seagate believes, makes mass-capacity storage an essential layer of future AI infrastructure alongside GPUs, memory and SSDs.

For a market that spent much of July pricing in a collapse of the AI storage trade, Seagate’s earnings delivered a very different message.

Demand continues to accelerate, pricing remains favorable, and customers are committing capacity years in advance.

Image: Shutterstock