Shares of data storage companies soared after a strong report from Seagate

Shares of Seagate Technology, one of the leaders in the data storage market, soared by 15% in trading on April 29 at an intraday high. The day before, it forecasted revenue and profit for the next quarter above Wall Street's expectations, writes Reuters. Such a jump provoked an increase in quotations of participants of the entire data storage market: shares of Western Digital rose by 9%, SanDisk - by almost 8%, and memory chip maker Micron Technology grew by about 4% at the beginning of trading, but then slowed down to about 2%.

If shares of Seagate Technology, Western Digital, SanDisk and Micron continue to rise, the combined market capitalization of these four storage technology companies could add $60 billion, notes Reuters.

Seagate's positive report has given investors confidence that companies' spending on AI hardware will remain high, the agency points out.

- Seagate's net income for the third quarter of fiscal 2026 (the company's third quarter ended in early April) was $748 million, or $3.27 per share, a significant increase from last year's $340 million, or $1.57 per share.

- Adjusted earnings for the same time period came in at $4.1 per share, well ahead of both the FactSet analyst consensus forecast of $3.51 and the company's own expectations, which were in the range of $3.2 to $3.6.

- Seagate's quarterly revenue rose to $3.11 billion from $2.16 billion a year earlier, which was also above analysts' expectations of $2.96 billion.

- Wall Street's expectations also significantly exceeded Seagate's financial guidance for the next, fourth quarter of fiscal 2026, Reuters reports. Based on the strong results of the ended quarter, Seagate said it expects revenue of $3.45 billion (plus or minus $100 million) in the next reporting period, compared to analysts' average estimate of $3.16 billion, and adjusted earnings per share of $5 (plus or minus $0.2), significantly higher than the $3.97 analysts had projected.

The company noted that this outlook assumes minimal impact from U.S. tariff policy or military conflict in the Middle East.

Large companies are increasingly investing in data drives, hard drives and other digital media in an effort to modernize their AI models and infrastructure. Seagate's positive results and a surge in storage stocks underscore investor confidence that corporate spending on AI will continue to support demand for storage equipment, despite general market concerns about the pace of AI adoption, Reuters points out.

Seagate and rival Western Digital have previously said their capacity is fully allocated and sold out by the end of calendar year 2026, the agency notes. Morningstar analysts said the development of artificial intelligence is likely to allow hard disk drive makers to approach pricing of their products from a stronger position. The trend is expected to continue through at least 2030, and possibly longer, which could further increase the market value of companies in the industry, experts said.

Analysts at Mizuho raised their outlook on Seagate shares to $700 from $565, maintaining an "Outperform" recommendation, amid the company's earnings release and outlook, Investing.com writes.

According to MarketWatch, 22 Wall Street analysts out of 28 who monitor Seagate's stock recommend buying it (Buy and Overweight ratings), another five recommend holding positions, and only one recommends selling (Underweight rating).

Rising demand for data storage is accompanied by a spike in memory chip prices, Reuters notes: energy-intensive AI data centers use a lot of high-bandwidth HBM memory chips to store and process huge amounts of data. The shortage of memory chips is forcing companies to rush to find equipment that can meet their storage needs - benefiting physical hard disk drive makers such as Seagate, Reuters says.

This article was AI-translated and verified by a human editor