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Live Earnings Blog: Will Seagate (STX) Soar After Announcing Earnings?
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Now Up .74%
Seagate’s stock is now up .74%. The next event to watch for is the company’s earnings call which is set to start at 5 p.m. ET.
Seagate is Flat
Seagate shares initially popped slightly after announcing earnings, but shares are now flat.
One are to watch is the company’s outlook for next quarter. Here’s what Seagate forecast:
• Revenue of $2.10 billion, plus or minus $150 million
• Non-GAAP diluted EPS of $1.70, plus or minus $0.20
That revenue figure is below Wall Street’s forecast of revenue of $2.10 billion next quarter. The company’s EPS forecast is close to Wall Street ($1.70 forecast vs. expectations of $1.71), which shows continuing margin strength.
However, it’s likely that Seagate’s forward guidance is what’s holding it back from soaring after-hours.
Earnings Are Out
Seagate’s earnings have been released, and here’s the figures to know:
- Revenues: $2.33 billion (Wall Street expected $2.32 billion)
- EPS (Normalized): $2.03 (Wall Street expected $1.88)
- EPS (GAAP): $1.55 (Wall Street expected $1.55)
Seagate’s CEO Dave Mosley highlighted the company is seeing its highest gross margins in a decade, which contributed to the significant beat on normalized EPS.
Holding onto 4% gains in late trading
Seagate is continuing to hold onto 4% gains in late trading. Its earnings should release shortly after today’s closing bell.
One factor in Seagate’s rise today may be news that a group led by Oracle, Softbank, and Oracle is investing up to $500 billion in private sector AI infrastructure.
The move has benefitted companies across the cloud computing and AI infrastructure space.
Seagate Comments on Artificial Intelligence
As we wait for Seagate’s earnings to release after the bell, let’s take a look back at what the company had to say about the growth of artificial intelligence on their last conference call.
We’ve highlighted some key areas to pay attention to.
“Data indicates that video is the most effective format for engaging digital audiences. Furthermore, research suggests that longer-form video content and personalization through AI technology can significantly enhance revenue generation opportunities for our customers. These trends bode well for mass capacity HDDs, which are ideally suited for storing large and diverse, data-intensive video content. HDDs comprise close to 90% of bytes stored in public cloud environments and we are confident that proportion will hold for the foreseeable future.
“Among the enterprise and OEM customers, we observed the first meaningful uptick in nearline demand following a multi-quarter period of stability. This increase reflects an improvement in traditional server demand as well as higher storage content per unit, pushing the average capacity per enterprise drive to a new record high. In the VIA markets, sales remained stable in the September quarter and slightly ahead of our expectations. We are witnessing a shift towards more cloud-like storage solutions that utilize higher capacity drives.
This transition is due in part to longer data retention needs and increased video analytics. Our HDD solutions, including Mozaic camera products, provide cost efficiency and scalability to our VIA customers’ evolving demands. These same advantages are also crucial for generative AI applications, which is why we continue to believe Gen AI will be a driver of mass capacity storage simply by being a powerful catalyst
for data creation. HDDs provide a trusted, economical and secure platform to host data that feeds into AI engines and preserves the content produced by AI-powered applications.
This data is ultimately fed back into the AI training models in a continuous cycle. As data center architects prepare for GenAI to move into the widespread adoption phase, they continue to grapple with cost, scale and power challenges. Seagate’s product road map is addressing each of these key challenges. Compared with NAND-based storage alternatives, our HDD solutions offer approximately 6x lower cost per terabyte.
And HDDs are roughly 9x more capital efficient, delivering the economies of scale necessary to support the anticipated surge in data demand. And according to cloud customers, HDDs have 10x lower embodied carbon per terabyte relative to NAND, which can translate into a much lower carbon footprint, very important given the world’s growing number of data centers. That provides a good segue into our product ramp and qualification plans.”
Seagate Expectations for 2025
Below we previewed what Wall Street expects next quarter, but what does it expect looking ahead?
Currently, Wall Street expects normalized earnings of $8.26 in Fiscal 2025. As a reminder, Seagate’s fiscal year ends in June so it will be reporting its second quarter tonight.
Looking ahead to Fiscal 2026 (ending in June 2026), Wall Street expects earnings of 9.73.
That leaves Seagate trading for slightly more than 10X Fiscal 2026 earnings headed into tonight’s report.
Seagate Technology‘s (Nasdaq: STX) stock has been rallying today, up 4%. Will the omentum continue through tonight’s earnings?
The company’s stock jumped up and down throughout 2024. Year-to-date returns were looking exceptional headed into October, but a 23% decline from October 22nd through the end of the year erased gains.
However, the company’s stock is up 18% so far in 2025. Let’s look at what the market expects from the storage specialist when it reports its Q2 2025 earnings tonight after the bell.
Second Quarter Earnings Expectations
Wall Street expectations for Seagate’s second fiscal quarter (for the period October to December 2024) currently stand at:
- Revenue: $2.32 Billion
- EPS (Normalized): $1.88
- EPS (GAAP): $1.64
- Operating Income: $505.7 Million
Those numbers would be a nice jump from results last year. In Q2 Fiscal 2024, Seagate reported revenue of $1.655 billion, operating income of $183 million, and normalized earnings of $.33 per share.
Looking ahead to next quarter (Fiscal Q3 2025), here’s the guidance Wall Street expects from Seagate:
- Revenue: $2.20 Billion
- EPS (Normalized): $1.71
- EPS (GAAP): $1.57
- Operating Income: $464.9 Million
What to Watch for in Tonight’s Earnings
Here are a couple key areas to watch when Seagate reports:
- HDD Margins: Margins in Seagate’s HDD business have driven its recent rebound to profitability. Last quarter, the company reported Non-GAAP margins in the business in the mid-30% range. This trend will need to continue if Seagate hits targets across the next 18 months.
- AI Commentary: Everyone in technology is focused on AI, and Seagate has boasted that AI will drive demand for its mass-capacity HDDs. Watch for commentary about how both cloud computing and AI demand are trending as we enter 2025.
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