Seagate Technology (STX) has been on an impressive run, soaring 63% over the past three months. The stock’s rally is powered by a combination of factors, including strong industry tailwinds and the company’s focus on improving profitability, reducing debt, and boosting cash flow.
The demand for mass-capacity storage is growing, driven by the growing digital shift toward cloud services and the ongoing expansion of data center infrastructure to support artificial intelligence (AI) advancements. Seagate, with its industry-leading data storage solutions, is benefiting from this surge as enterprises and hyperscale cloud providers increasingly rely on its high-capacity hard drives.
The company’s financial performance confirms the strength of this trend. In its most recent fiscal third quarter, Seagate delivered a 30.5% year-over-year revenue increase and an 81% jump in adjusted gross profit. The company’s management highlighted that Seagate has now expanded gross margins for eight consecutive quarters and posted the third-highest operating margin in its history.
Supporting this growth is Seagate’s supply discipline, shift to a build-to-order model, and dynamic pricing strategy have all helped it stay profitable.
Looking ahead, Seagate continues to see solid demand for its products, which is expected to drive its financials and share price higher. While STX stock is currently trading above the analysts’ average price target of $125.72, the highest price target for Seagate is $200, implying further upside potential of over 41% from current levels.
Seagate will continue to benefit from strong demand for its 24-terabyte (TB) and 28TB products, which are the company’s top performers in terms of revenue and storage volume. Adding to the momentum is the introduction of its new Heat-Assisted Magnetic Recording (HAMR)-based Mozaic drives. Volume shipments to select customers are underway, and a broader rollout is expected in the second half of 2025.
Demand from the cloud segment remains a key driver of growth. In the March quarter, cloud nearline revenue and exabyte shipments jumped nearly 10% sequentially and almost doubled year-over-year. Growth is being fueled not only by major cloud and hyperscale providers but also by increasing interest from edge data centers and private cloud operators.
