STX Stock Forecast & Price Target

Seagate Technology Holdings reported a significant growth in Data Center revenue, reaching $2.1 billion, which reflects a 34% increase year-over-year and now constitutes 80% of the company's total revenue, indicating robust demand from cloud service providers. The company achieved a record non-GAAP gross margin of 40.1%, demonstrating effective cost management and operational efficiency, while overall revenue for Q1 FY26 increased to $2.63 billion, surpassing management's guidance. The accelerated adoption of the HAMR Mozaic platform and strong customer qualifications within the cloud market suggest a continuation of positive financial performance, positioning Seagate favorably for sustained growth through FY27.

The analysis of Seagate Technology Holdings indicates a concerning trend, particularly in the Edge/IoT segment, which experienced a significant decline of 11% quarter-over-quarter and 12% year-over-year, highlighting a weakening demand from consumers and clients. Despite achieving a non-GAAP EPS of $2.61, above previous guidance and expectations, the overall performance metrics suggest that the decline in a key market segment could undermine future growth potential. Additionally, while the management's build-to-order strategy appears to enhance inventory control and visibility, the ongoing challenges in consumer demand raise doubts about the sustainability of Seagate's revenue and profitability in the current market environment.