Seagate forecasts strong 1Q growth on sustained AI-driven cloud demand

On July 28, Seagate Technology reported sharply higher revenue and profit for its fiscal fourth quarter, driven by continued demand from cloud data center customers and higher-capacity storage products tied to artificial intelligence infrastructure. The company also issued first-quarter fiscal 2027 guidance above its prior quarter's revenue level, reflecting expectations that demand momentum will continue.

Revenue for the fourth quarter of fiscal 2026 rose 48.5% year over year to US$3.63 billion, up 17% from the previous quarter. Gross profit more than doubled year over year, rising 107.7% to US$1.90 billion, and increased 31% sequentially.

Operating income climbed 174.5% year over year to US$1.56 billion, up 56% from the prior quarter. Net income rose 165.2% from a year earlier to US$1.29 billion, up 73% sequentially.

Data center segment continues to drive growth

The Data Center segment remained Seagate's largest business and principal growth driver during the quarter.

Revenue from the segment increased 57.4% year over year to US$2.93 billion, accounting for more than four-fifths of total company revenue. Sales also rose 17% from the previous quarter, reflecting continued demand from cloud customers deploying higher-capacity storage systems.

The Edge IoT business generated revenue of US$697 million, up 20.0% year over year and 14% sequentially.

AI and cloud demand power results

CEO Dave Mosley said fourth-quarter revenue and non-GAAP earnings per share exceeded the company's expectations. He said the results concluded a fiscal year in which Seagate increased annual revenue by 34%, achieved record profitability, and generated a record US$3.1 billion in free cash flow.

Mosley attributed the company's performance to robust demand from cloud data center customers and disciplined operational execution. He said Seagate expects the positive momentum to continue into fiscal 2027.

The company also said the rapid adoption of artificial intelligence is increasing data generation and reinforcing long-term demand for mass-capacity storage. Seagate said its Mozaic platform and heat-assisted magnetic recording (HAMR) technology roadmap position it to meet growing exabyte storage requirements while supporting profitable growth.

First-quarter guidance points to further growth

For the first quarter of fiscal 2027, Seagate forecast revenue of approximately US$4.1 billion, plus or minus US$100 million, implying continued sequential growth from the just-reported quarter.

The company expects non-GAAP diluted earnings per share of US$7.30, plus or minus US$0.20.

Management said the outlook incorporates the estimated net dilutive impact of exchangeable senior notes due in 2028 and assumes minimal effects from current global tariff policies or the conflict in the Middle East based on conditions at the time the guidance was issued.

Analysts see continued strength in cloud storage demand

Bloomberg Intelligence said Seagate continues to benefit from scale advantages as cloud providers increase purchases of higher-capacity hard drives to support AI infrastructure. The research firm said the company's fourth-quarter revenue and earnings exceeded its own guidance, while the first-quarter outlook pointed to accelerating growth.

Citi also described both the quarterly results and forward guidance as strong, noting management's comments on robust cloud data center demand and disciplined execution.

Vital Knowledge said Seagate's earnings outperformed a high market bar for technology companies during the current reporting season, describing the earnings-per-share beat as impressive and characterizing the company's outlook as particularly strong.

Source: Seagate, July 2026

Source: Seagate, July 2026

Article edited by Jerry Chen