Seagate Technology – The Third Member of The US Memory Trilogy

This is another powerful chart, with an explosive breakout from two decades of upward-sloping consolidation. Another sleeping beauty wakes up. The Holy Grail for investors is to find a sector being transformed by a massive ‘something new’. This chart carries that strong message about what is happening here – something epic.

It is common sense. The shares have been bumping along for 20 years, and suddenly they go berserk. Something is happening, and whatever it is is unlikely to be done and dusted in a year. This is something big with more surprises to come.

Moments like this are hard to analyse. It is like a stage set change in a theatre, ushering in a whole new set of experiences. It takes time for observers to get their heads around the new reality. There is plenty of speculation, with experts pontificating like mad, but if they knew so much, why did they not anticipate these developments? The truth is, we are in uncharted territory.

So let us get to the facts. In the immortal words of Robbie Burns – ‘”Facts are chiels that winna ding”. You can’t argue with the facts, whereas opinions are a dime a dozen.

The facts are these. The chart is incredible; a textbook bullish chart. Memory prices have exploded since October 2025 as AI-driven demand overwhelms supply. Then we have the experience of the companies, in this case, Seagate Technology.

Seagate delivered a very strong March quarter. underscoring both the durability of demand and the leverage in our model. We grew revenue 44% year-over-year, achieved record gross margins, more than doubled non-GAAP operating income and generated one of our highest ever levels of free cash flow at close to $1 billion. Momentum continues to build for our Mozaic HAMR-based platforms with 2 of the world’s largest CSPs now qualified on our 4+ terabyte per disk product. For both of these customers, qualification timelines were in line with PMR products, underscoring the maturity of the platform, and our team’s outstanding execution as we work to meet customers’ accelerated demand requirements.

Our strong Q4 guidance issued today demonstrates our growing conviction in the business and future opportunities. As we look ahead, we see Seagate now entering a period of structural growth. Our belief is rooted in 3 pillars. First is the sustainability of rising storage demand. AI-enhanced applications are accelerating data creation, expanding retention and increasing reliance on historical data sets for advanced reasoning, extending beyond cloud data centers to the enterprise edge, these trends require storage solutions that deliver cost and energy efficiency at scale, making high capacity hard drives essential to modern data center architectures. Second is our strategic technology roadmap.

Anchored by the Mozaic platform and HAMR innovation, we are delivering critical technology breakthroughs at the right time to support our customers’ rising demand now and into the future. Third is our proven strategy focused on converting demand into profitable growth and value creation. Our build-to-order model enhances demand visibility and supports pricing and supply discipline. Our HAMR-based product roadmap enables margin expansion as we scale. And our capital allocation framework enables us to leverage our earnings growth and cash flow generation into strengthening our balance sheet and enhancing shareholder returns over the long term.

(Heat-Assisted Magnetic Recording (HAMR) is a groundbreaking technology designed for hard disk drives (HDDs) to significantly increase the amount of data that can be stored on them. It solves the “magnetic trilemma” by temporarily heating the storage medium during the writing process, allowing for smaller, more stable magnetic bits.)

The combination of these pillars, robust market demand, a proven technology roadmap and disciplined operational execution is already driving performance ahead of the financial targets outlined at our analyst event a year ago. The progress we have made gives us confidence to significantly increase our annual revenue growth target from the low to mid-teens, to a minimum of 20% over the next few years. This confidence is reinforced by the strength of the current demand environment shaped by ongoing momentum from cloud investments. The March quarter marked our tenth consecutive period of revenue growth from cloud customers, who have committed hundreds of billions of dollars in infrastructure CapEx investment to support their own long-term growth in AI transformations.

The outlook is stratospheric.

Using Remaining Performance Obligations, or RPO, as a proxy for future revenue potential, the top 3 global CSPs (Cloud Service Providers) alone have nearly doubled their RPO to a staggering $1.1 trillion, a clear indicator of sustained growth ahead. Assurance of reliable supply is our customers’ highest priority, particularly for nearline products, which accounted for close to 90% of total Exabyte shipments in the March quarter. We have Exabyte scale supply agreements in place with nearly all major cloud and hyperscale customers, with nearline capacity almost fully allocated through calendar 2027. At the same time, we are finalizing build-to-order contracts with these customers through the end of fiscal 2027, which defines specific configuration and pricing.

The strong outlook stretched ever deeper into the future.

Our value-based pricing approach enables customers to plan with confidence, while contributing to sustained profit growth for Seagate. And we are actively engaged in strategic planning discussions now reaching into calendar 2028 and beyond. Today, AI sits at the center of nearly all customer demand conversations. We are in the midst of an inference inflection where compute infrastructure is shifting from periodic training to becoming engines that continually generate mass capacity data. Leading AI chatbots now handle billions of user prompts daily, each consuming and producing multimodal outputs that fuel an unprecedented surge in data creation.

Agentic AI pushes this even further, transforming sporadic engagements into autonomous workflows that continuously ingest inputs, generate reasoning and store durable outputs that are dramatically increasing data intensity and long-term storage requirements. AI is amplifying demand across existing applications such as video, where large cloud providers are integrating AI into platforms to boost user engagement and revenue opportunities, driving new video creation and the need to store it. We believe demand will further accelerate as AI applications move beyond the data center into the physical world, powering manufacturing systems, autonomous vehicles and robotics. These physical AI deployments generate massive data streams from sensors, cameras and telemetry with a single autonomous vehicle producing up to 4 terabytes per hour.

A portion of this data is reused for simulation, validation and retraining with retention requirements stretching 5 to 10 years to meet compliance standards. These inference-based applications are creating a growing need for both cloud and local storage. We have started to see interest from sovereign and neo cloud data centers for our enterprise nearline drives and system solutions. To manage these intensifying workloads, cloud and edge data centers deploy storage tiers that work in concert to optimize performance, cost, energy efficiency and data durability. Hard drives are critical to these modern data center architectures, delivering scalable capacity along with energy and cost efficiencies that form the foundation of the mass data storage tier.

This is as exciting as it gets. Investors seem to be almost in denial about this as share prices struggle to catch up with a transformed reality. Sometimes everything changes, and this looks like one of those moments. You either believe what these guys are saying, or you don’t. If you believe you must buy the shares.

In summary, Seagate is entering a period of structural growth, powered by durable demand, increasing adoption of our Mozaic-based products and continued execution against the strategy designed to drive margin expansion, cash flow and long-term value creation.

Wow! Wow! Wow!

Share Recommendations

Seagate Technology. STX

Strategy – Buy A Sector Taking Off

I have never seen anything as incredible as what is happening to memory stocks. On fire doesn’t do justice to what is happening. There are many people out there who are sure it will all end in tears, probably soon.

Anything is possible, but that seems incredibly unlikely, at least for the foreseeable future. The obvious explanation is that something huge is happening, which just may be one of the greatest opportunities in stock market history. It would be awesome if we caught this wave even sooner than we did, but if it is still early days, there could be fortunes to be made.

These shares will be volatile. Try to turn that to your advantage. Share price drops are springboards for the next rise.