What Happened?
Shares of data storage manufacturer Seagate (NASDAQ:STX) jumped 5.3% in the morning session after the stock's positive momentum continued as the company reported strong third-quarter financial results and provided an upbeat forecast, driven by surging demand for its AI data storage solutions.
The data storage company's revenue came in at $3.1 billion with earnings per share of $4.10, beating expectations on both fronts. For the upcoming fourth quarter, Seagate guided for revenue of about $3.45 billion and $5 in earnings per share. The strong performance is linked to the buildout of AI infrastructure, with large data centers now making up 80% of the company's revenue.
Demand from major cloud service providers, known as hyperscalers, was so high that management noted its nearline capacity is almost fully allocated through 2027. In response to the strong results and outlook, analysts at Rosenblatt and Bank of America raised their price targets on the stock.
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What Is The Market Telling Us
Seagate’s shares are extremely volatile and have had 44 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock gained 10% on the news that the company reported strong first-quarter 2026 results that significantly exceeded Wall Street's expectations.
The company's revenue grew 44.1% year-over-year to $3.11 billion, while its adjusted earnings per share of $4.10 beat consensus estimates by 17.1%. The strong top-line performance, which marked the eighth consecutive quarter of growth, was accompanied by significant margin expansion.
Seagate's operating margin rose to 32.1% from 20% in the same quarter last year, and its free cash flow margin soared to 30.6% from 10%. The impressive growth in both revenue and profitability demonstrated strong operational execution and efficiency gains, reassuring investors about the company's financial health.
Seagate is up 147% since the beginning of the year, and at $710.89 per share, has set a new 52-week high. Investors who bought $1,000 worth of Seagate’s shares 5 years ago would now be looking at an investment worth $7,761.
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