Seagate Earnings Spark Debate as Cramer Questions Demand Sustainability
Shares have surged 447% over the past year, drawing sharp divides between bulls citing AI infrastructure growth and bears warning of overvaluation and technological shifts.
Seagate Technology Holdings plc (NASDAQ:STX) reported fiscal fourth-quarter revenue of $3.6 billion, marking a 48.5% annual increase, with operating margins expanding to 52.7% from 37.9% in the same period last year. Despite the stock’s significant price appreciation, CNBC host Jim Cramer stated the earnings were not poor, though he expressed frustration with management’s repeated assertions of sustained demand amid geopolitical tensions involving Iran.
Seagate’s shares have risen 447% over the past year and 181% year-to-date, catching investors, including Cramer, by surprise. In May, Cramer had previously labelled Seagate’s earnings multiple as “too pricey,” noting it was nearly 50 times next year’s earnings estimates. Following the late July earnings release, he remarked that while Seagate performed well, the company must address geopolitical risks, asking how many times management could claim there had been no diminution of demand in a single conference call.
A market debate persists between bulls, who attribute growth to sustainable AI infrastructure demand, and bears, who argue the stock is overvalued and vulnerable to technological shifts towards solid-state drives. Bulls contend that high-density drives have enabled margin expansion, while bears caution that the triple-digit share price jump suggests future growth may already be priced in. They also highlight Seagate’s reliance on Heat-Assisted Magnetic Recording (HAMR) products and the Mozain platform to maintain market share.
Hedge fund interest in Seagate increased, with 93 funds holding stakes in the first quarter of 2026, up from 74 in the fourth quarter of 2025. Arrowstreet Capital remained the largest stakeholder, though its $561 million position decreased by 56%. D E Shaw increased its stake by 62% to $505 million. As of mid-July, 3.7% of Seagate’s float was held by short sellers.
The divergence in sentiment reflects broader concerns about the cyclical nature of the storage industry versus the current AI-driven boom. While some investors see promise in Seagate’s ability to capitalise on infrastructure buildouts, others remain wary of potential headwinds should the industry shift away from traditional magnetic storage solutions.
