Seagate upbeat forecast drives data-storage stock surge amid AI spending confidence
Seagate's fourth-quarter revenue beat and full capacity allocation through 2026 sparked a sector-wide jump, with rivals Western Digital, Micron, and SanDisk also posting gains despite broader market caution.
Shares of data-storage companies jumped on Wednesday following strong revenue and profit forecasts from Seagate Technology, which indicated sustained enterprise spending on artificial intelligence equipment. Seagate shares soared nearly 17 per cent, while Western Digital, Micron Technology, and SanDisk also rose. The gains reflect investor confidence that enterprise AI investment will maintain demand for storage hardware despite broader market concerns regarding the pace of AI adoption.
Seagate forecast fourth-quarter revenue of $3.45 billion, beating estimates of $3.16 billion. Executives stated capacity is fully allocated through 2026, a detail that has previously been confirmed by leadership at both Seagate and rival Western Digital. This outlook suggests a robust pipeline of orders that supports the sector's valuation even as wider market sentiment fluctuates.
Seagate CEO Dave Mosley highlighted that AI is amplifying demand across existing applications like video, driving new creation and storage needs. He noted that large cloud providers are integrating AI into platforms to boost user engagement, which in turn drives the need to store new content. This narrative has helped counter concerns that the initial AI boom might be slowing down.
Analysts at Morningstar suggest the AI buildout could grant hard disk drive makers stronger pricing power through at least 2030. This projection adds to the bullish case for the sector, suggesting that manufacturers will retain leverage over buyers as the demand for physical storage hardware remains critical for upgrading AI models and infrastructure.
The sector surge occurred despite the Nasdaq falling almost 1 per cent on Tuesday due to concerns that OpenAI had fallen short of its user and revenue goals. The divergence highlights a market split where investors are distinguishing between the performance of specific AI companies and the underlying hardware requirements necessary to support the technology.
Companies have increasingly funneled capital into data drives, hard disks, and digital storage to upgrade AI models. A shortage of memory chips has forced companies to seek alternative hardware solutions, benefiting physical hard drive manufacturers like Seagate. Seagate's shares have already more than doubled in value during the current year prior to this latest forecast.
