Seagate Technology's stock fell about 8% ahead of its fiscal fourth-quarter earnings report, but the company delivered results that blew past analyst estimates. Revenue hit $3.63 billion, up 48% from a year ago and well above the $3.5 billion Wall Street expected. Non-GAAP earnings per share came in at $5.71, topping the $5.10 consensus.
Why the stock dropped
The pre-earnings slide reflected broader market jitters that the AI infrastructure buildout might be cooling. But Seagate's numbers told a different story. The company's non-GAAP gross margin jumped to 52.7% from 37.9% a year earlier, a sign that demand for its high-capacity hard drives remains strong as cloud providers stock up for AI workloads.
Record cash flow and raised guidance
Seagate generated a record $3.1 billion in free cash flow for the full fiscal year. For the current quarter, the company guided revenue to $4.1 billion, well above the $3.8 billion analysts had penciled in. CEO Dave Mosley said the results were driven by robust cloud data center demand and sees that momentum continuing into 2027.
What the CEO said
“Our strong performance reflects the ongoing demand for mass-capacity storage solutions in the cloud,” Mosley said. He added that the company's outlook counters fears that the AI infrastructure buildout is overheating. The guidance suggests that data center operators are still buying aggressively.
Market reaction
Despite the earnings beat and raised forecast, the stock's pre-earnings drop shows how skittish investors have become about AI-related names. The question now is whether the market will reassess after digesting the strong numbers. Seagate's next quarterly report will be a key test of whether the AI demand story has legs.
