Record margins and a strong Q4 outlook sent Seagate shares flying and lifted its rivals.
Seagate Technology delivered a quarter that exceeded expectations on nearly every meaningful metric, and Wall Street responded immediately. Shares of the data storage company surged approximately 17% in premarket trading on Wednesday after the company not only beat third-quarter estimates by a comfortable margin but also issued fourth-quarter guidance that left analyst forecasts well behind.
The results confirmed what many in the technology sector had been anticipating: the artificial intelligence boom is not just a story for chipmakers and software platforms. Companies building the physical infrastructure to store and process the enormous volumes of data that AI systems require are emerging as some of the cycle’s most direct and durable beneficiaries.
A quarter that beat on every front
Seagate reported third-quarter revenue of $3.11 billion, surpassing the analyst consensus of $2.96 billion and representing a 44% increase compared to the $2.16 billion the company generated in the same period a year earlier. Adjusted earnings per share came in at $4.10, well ahead of the $3.48 that analysts had penciled in.
Profitability metrics were equally impressive. The company’s non-GAAP gross margin expanded to 47%, up sharply from 36.2% in the same quarter last year. Operating cash flow reached $1.1 billion for the quarter, while free cash flow came in at $953 million — a figure the company’s leadership described as approaching $1 billion, a milestone that underscores how effectively Seagate is converting revenue growth into tangible financial returns.
The company also used the period to strengthen its balance sheet, reducing debt by approximately $641 million and returning $191 million to shareholders through a combination of dividends and share repurchases. A quarterly dividend of $0.74 per share was declared, payable on July 7, 2026, to shareholders on record as of June 24.
Guidance delivers the bigger surprise
As strong as the third-quarter numbers were, it was the forward outlook that really moved the stock. Seagate projected fourth-quarter revenue of $3.45 billion, plus or minus $100 million, against analyst expectations of $3.16 billion. At the midpoint, that guidance lands roughly 9% above consensus — a gap that is difficult to ignore.
On the earnings side, the company projected adjusted earnings per share of $5.00, plus or minus $0.20, compared to the Wall Street estimate of $3.97. The midpoint of that range represents a 26% premium to what analysts had been forecasting, a degree of outperformance that sent a clear signal about the confidence Seagate’s management has in the near-term trajectory of demand.
AI infrastructure is the engine
The driving force behind Seagate’s momentum is the same one reshaping capital spending decisions across the technology industry. Enterprises racing to integrate AI into their operations are investing heavily in the storage hardware needed to manage the vast datasets that underpin modern AI models. That demand has translated directly into pricing power and volume growth for Seagate, whose hard disk drives sit at the center of large-scale data center buildouts.
Memory chip prices have also been climbing, adding another layer of investor enthusiasm to the storage market more broadly. Seagate’s own shares have now more than doubled in value so far this year, following a performance in 2025 in which they more than tripled.
The rally spreads to rivals
Seagate’s results proved contagious across the sector. 3 competitors saw their shares move meaningfully higher in the same session: 1. Western Digital jumped 9%, 2. SanDisk rose approximately 7% and 3. memory chipmaker Micron Technology gained around 4% — a broad-based move that reflected investor confidence in the strength of the overall data storage environment, not just one company’s quarter.
With a $20 billion-plus backlog building across the sector and AI investment showing no signs of slowing, analysts who cover Seagate maintained bullish ratings following the report, pointing to continued growth in pricing, margins and cash flow as reasons to stay constructive on the stock well into the next fiscal year.
Source: Reuters / InvestorsHub