SEAGATE (NASDAQ:STX)
Is It Time to Open Seagate
For the Future of Data Storage?
Michelle Pinzari & Neha Rajamani | JUNE 16, 2025
ABOUT
Seagate Technology Holdings Plc
Founded in 1979 and headquartered in Fremont, CA, Seagate Technology Holdings Plc (NASDAQ:STX) is a holding company that focuses on electronic data storage solutions and engages in the development, production, and distribution of data storage products. Its product lines include hard disk drives (HDD), solid state hybrid drives, solid state drives (SSD), peripheral component interconnect express cards, etc. It is one of the largest global HDD data storage suppliers, holding almost 40% of the HDD market, and the first to launch new data storage technologies into the market. It also caters to both retail users and large-scale hyperscalers’ data centers.
History
Founded in 1979 in a small office in California, Seagate Technology Holdings Plc was started by Alan Shugard, Tom Mithcell, Doug Mohan, Finis Conner, Syed Iftikar, and Al Mackenzi. During this time, the need for reliable and high-capacity storage solutions was steadily increasing as the computer industry was booming. These founders were motivated to create innovative storage solutions to revolutionize the industry. Alan Shugart played an integral role in the creation of the first 5.25-inch hard disk drive. Furthermore, Tom Mitchel used his engineering expertise to make Seagate’s products reliable and cost-effective while Doug Mohan and Finis Conner took the lead in designing Seagate’s earlier products. In 1992, Seagate launched the Cheetah Drive, the world’s first 10 000 RPM hard drive. Later, in 2000, Seagate positioned itself as a dominant player in the industry by acquiring one of its competitors Maxtor. Recently, it partnered with IBM in 2020 to develop new technologies for data storage solutions with enhancements in cloud computing and AI.
As of June 16, 2025
27.5 B
Market Cap
18.64
PE Ratio (TTM)
14.7x
EV/EBITDA (TTM)
129.57
Stock Price (NASDAQ)
52-Week Performance
Revenue Breakdown By Source
BULL CASE
Powering the Future of Data Storage with HAMR Technology
Seagate Technology Holdings plc (NASDAQ: STX) has a strong product offering and roadmap through its Mozaic product line, powered by Heat-Assisted Magnetic Recording (HAMR) technology. HAMR technology utilizes lasers to heat up the surface area of the granular iron platinum disk to support more storage, and the technology took almost a decade to develop. It currently delivers Mozaic 3, providing 3TB per disk, the first of its kind in the industry. Mozaic 4, providing 4TB per platter, is scheduled to enter customer qualification next quarter. As Seagate continues to increase the density of data on its drives, the company is confident that grow by 15-20% in capacity every year with its ambitious goal to deliver 10 TB per platter by 2028 and 150TB by 2035. While scalability has been a challenge to overcome, it is important to note the alignment of the roadmap and the growing demand from hyperscalers and cloud customers. In November 2024, Recon Analytics survey commissioned by Seagate found that existing storage practices will need to increase substantially to support full AI adoption, as 61% of infrastructure buyers relying primarily on cloud storage for AI data management expect their storage needs to at least double by 2028. A report by Technode reveals that nearly 95% of IT industry business leaders are experiencing growing demands for data storage as well. This further demonstrates the demand for data storage, which is believed to create multi-year growth for Seagate.
McKinsey & Company
Precedence Research
Optimistic 2028 Goals Strengthened by
AI Tailwinds and Analyst Revisions
At its 2025 Investor and Analyst Event, Seagate has set out ambitious financial targets for 2028. As demand for data storage continues to soar, the outlook for the company’s HAMR technology is optimistic. Due to emerging technology partnerships between the US and Saudi Arabia, Rosenballet analysts predict that Seagate will benefit from the new marketing opportunities from increased AI and computing infrastructure development. With Seagate reporting 31% revenue growth in Q4 FY2025, the company is expected to see an increase of 38% in revenue according to InvestingPro data. Dave Mosley, Seagate’s CEO, has also underscored the progress the company has made in enhancing supply discipline and demand visibility, expressing confidence in the company’s technology and strategy. Kerrisdale Capital especially highlighted Seagate’s leadership in the hard disk drive market and brand positioning in the AI and data center sectors with its HAMR technology advancing and market share increasing among well-known hyperscalers like Amazon and Google. Citi analysts increased Seagate’s price target from $120 USD to $125 USD while reiterating their Buy rating. These upward revisions demonstrate a positive change in Seagate’s market outlook, recognizing its growth potential.
Increased Shareholder Confidence: $5 USD Billion Share Buybacks
On May 21, 2025, Seagate Technology announced that its Board of Directors has increased its share repurchase program to $5 billion. This was a strategic move that demonstrates its strong financial position and commitment to capital returns, enhancing shareholder value. The program does not have a time limit and allows for various methods of share acquisition, making it flexible. Notably, the company has continuously offered dividend payments for 15 years with a current yield of 2.2% (as of June 9th, 2025), demonstrating its confidence in shareholder returns.
BEAR CASE
Finer Examination: Concerning Details Found in Q1 2025 Revenue and Industry Trends
As the developer of the original 5.25 inch hard disk drive, Seagate Technology Holdings plc (NASDAQ: STX) has displayed exceptional growth and solid financial results in Q1 2025. However, a closer examination of Seagate financial performance indicates that customers do not find the quality of their products up to par. It is important to recognize that any company can demonstrate short-term success, but what separates a company from good to great is their ability to maintain sustained growth for many years. As such, even though Seagate displays strong short-term performance, the company’s sales dropped at a 3.8% annual rate—lower than analysts' standards. Furthermore, the data storage company struggled to generate consistent demand for the past five years.
Stock Story
Even though cyclical revenue contractions are common in the semiconductor industry, it is important to note that Seagate trades at 14.1 x forward P/E, which is comparatively cheap to its semiconductor competitors. Although cheap stocks might seem like a bargain at first, it is also an indicator of deteriorating performance, which is reflected in the company’s inconsistent demand. Furthermore, the overall Hard Disk Drive (HDD) industry has experienced a significant decline with HDD shipments being down 9.5% and HDD revenues being down 9.4% in Q1 FYY2025 compared to Q4 FY2024.
Cash is King and so is a Strong Gross Profit
Margin—Seagate has neither
Seagate has a trailing gross margin, indicating weak structural profitability. Gross profit margin is a key financial indicator as it highlights the fraction of money a company gets to keep after paying for its Cost of Goods Sold, such as raw materials and manufacturing. Gross profit margin directly tells you how effective the company is in turning sales into profit. Seagate gross margin averaged 28.4% in the last two years, paying $71.59 to suppliers for every $100 in revenue. Compared to its semiconductor competitors, Seagate has the worst gross profit margin, indicating that the company lacks the pricing power in such a competitive market. Furthermore, the saying “Cash is King” is important to any business, no matter the industry. As cash covers all operating and capital expenses, it is a key indicator of a company’s reinvestment potential and its ability to return capital to shareholders. For the last two years, Seagate has shown weak cash profitability with free cash flow margin averaging to 8.3% and dropping 1.2% over the last five years.
Stock Story
Stock Story
Endless Controversies Indicate Supply Chain Vulnerabilities
In 2023, Seagate had to pay U.S authorities $300 million USD as a penalty for its relationship with Huawei, a telecommunications equipment company that has been blacklisted by the U.S since 2020. While their competitors followed the new U.S export controls, Seagate violated these controls to ship over $7.4 million USD in products and extend a $1 billion USD line of credit to Huawei. Although Seagate may have appeared to recover its finances and reputation from this controversy, in March 2025 news that fraudsters from China were selling used Seagate drives by manipulating the drive’s Field Accessible Reliability Metrics (FARM) emerged. Although Seagate has denied involvement and are currently investigating the issue, the volume of fraudulent drives continues to rise, with some certified partners unknowingly selling them to customers. This indicates severe supply chain vulnerabilities and poor customer satisfaction, reinforcing the ongoing trend that Seagate does not have the ability to ensure consistent demand from customers.
