Seagate heads into July 28 earnings with 2027 capacity fully contracted

Seagate Technology is expected to report fiscal fourth-quarter revenue of $3.5 billion on July 28, up 43% from a year earlier.

"We are entering a new era of structural growth fueled by AI-driven demand and increased adoption of our Mozaic products," the company said in its prior earnings call, flagging disciplined execution and margin expansion.

The Zacks Consensus Estimate calls for adjusted earnings of $5.10 a share, nearly double the $2.59 reported a year ago. Seagate guided revenue to $3.45 billion at the midpoint, with non-GAAP earnings of $5.00, plus or minus 20 cents. The company has beaten consensus in each of the past four quarters, with an average surprise of 10.7%.

The report comes as Seagate's nearline storage capacity is fully contracted through calendar 2027, giving investors rare multiyear revenue visibility. Shares have fallen about 20% from a 52-week high on concerns about hyperscaler spending, but the pullback has pushed the forward P/E to 33 times, a level some analysts consider attractive given expected earnings growth of nearly 90% in fiscal 2027.

Seagate's data-center business, which generated $2.5 billion in revenue in the fiscal third quarter — up 55% year over year — remains the primary growth engine. Adjusted gross margin reached a record 47% in Q3, up from 42.2% in the prior quarter, driven by favorable product mix and pricing. For Q4, management projects non-GAAP operating margin to rise into the low 40% range on operating expenses of about $295 million.

The company's HAMR technology roadmap continues to advance. Its 44-terabyte Mozaic 4+ platform is expected to lead shipments by the end of 2026, while the 50-terabyte Mozaic 5 remains on track for late-2027 qualification. As production scales, Seagate plans to expand HAMR beyond hyperscale customers into enterprise and edge markets.

Seagate faces competition from Western Digital, which trades at a forward P/E of 28.4 times, and Micron Technology at 6.6 times. Seagate's premium valuation reflects its dominant position in nearline HDDs and the structural demand from AI data centers, where its drives offer the lowest cost per terabyte for massive-scale storage.

The earnings report will test whether Seagate's growth trajectory can justify its premium valuation. Investors will watch for fiscal 2027 guidance and any commentary on hyperscaler spending plans, with the company's fully contracted capacity through next year providing a potential buffer against demand uncertainty.

This article is for informational purposes only and does not constitute investment advice.