Seagate rises 2.9% as Wells Fargo upgrade boosts AI storage outlook

Wells Fargo upgraded Seagate Technology to Overweight from Equal Weight, raising its price target to $1,100 from $900.

"With the recent market pullback and increasing confidence in what we view as a path to more than $50 in EPS and significant capital return capacity ahead, we upgrade STX," the Wells Fargo analyst wrote.

The new target implies about 20% upside from Seagate's close at $915.74 on Thursday. Shares rose 2.9% to $941.90 in Friday trading. The firm also raised its price target on rival Western Digital to $730 from $575, maintaining an Overweight rating.

The upgrade adds to a growing Wall Street consensus that traditional hard-disk drive makers benefit from the AI infrastructure buildout, as hyperscale data centers require massive storage capacity for training and inference workloads.

Seagate has been investing in heat-assisted magnetic recording technology to boost HDD capacity, positioning its products for AI data center demand. The company's nearline HDD business, which serves cloud providers, has been a key growth driver as enterprises expand storage for AI workloads.

The Wells Fargo upgrade follows a period of pullback in Seagate shares, which had declined from highs earlier in the year as broader tech sector volatility weighed. The stock now trades at about 18 times forward earnings, below the five-year average of 22 times, according to data compiled by Bloomberg.

The upgrade shows that Wall Street sees AI-driven storage demand as a multiyear growth cycle for HDD makers. Investors will watch Seagate's fiscal fourth-quarter earnings, expected in late July, for updated guidance on nearline HDD shipments and gross margins.

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