Seagate (STX) Stock Is Really Starting to Run Strong – Is It Still Worth Buying?

TLDR

• Seagate reported third-quarter fiscal 2026 revenue of $3.11 billion, with non-GAAP EPS of $4.10 and free cash flow of $953 million.
• Q4 guidance came in above expectations with revenue of $3.45 billion and adjusted EPS of $5.00.
• AI-driven demand for high-capacity hard drives is pushing the storage cycle higher and faster than expected.
• Morgan Stanley and Barclays moved price targets toward $1,000 or more, with a moderate buy consensus from 25 analysts.
• Seagate retired $641 million in debt and returned $191 million to shareholders during the quarter.

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Seagate’s technology has quietly become one of the most interesting AI toys on the market — not because it makes the chips, but because it makes the storage unit that holds everything the AI ​​produces.

Seagate Technology Holdings plc, STX

Hard drives weren’t supposed to be interesting in 2026. For years, the narrative was that hard drives were a dying business, being replaced by flash and the cloud. This story is being rewritten.

The company reported third-quarter fiscal 2026 revenue of $3.11 billion. GAAP gross margin was 46.5%, non-GAAP gross margin was 47.0%, and non-GAAP EPS was $4.10. Operating cash flow was $1.1 billion, with free cash flow of $953 million.

These are not business numbers to decline.

Q4 guidance was arguably more important. Seagate Expect revenue of $3.45 billion, plus or minus $100 million, and adjusted EPS of $5.00, plus or minus $0.20. Reuters confirmed that both numbers exceeded expectations, prompting the stock to rise sharply.

Why AI is fueling demand for hard drives

The connection between AI and hard drives is simpler than it seems. As AI models become larger and more widespread, cloud providers and enterprises need a place to store massive amounts of data. Hard drives provide a cost-effective solution at scale, as portable storage cannot always match on price.

Morgan Stanley Seagate’s Description Western Digital As top picks, it quotes estimates that demand for hard drives may grow 40% to 50% annually while supply grows only 30% to 35%. If this gap persists, pricing power remains constant – and margins remain healthy.

This dynamic is already showing in Seagate’s results.

Debt repayment and shareholder returns

Seagate didn’t just provide the most powerful cycle. During the third quarter, the company retired $641 million in debt and returned $191 million to shareholders through dividends and buybacks.

This type of balance sheet discipline separates well-managed cyclical trading from momentum trading. Management uses recycling to clean the books while still rewarding investors.

Wall Street has taken notice. MarketBeat is showing a Moderate Buy consensus from 25 analysts – 21 Buys, 4 Holds, 0 Sells.

The average price target moved from the mid-$700s to $830, while Morgan Stanley and Barclays pushed targets toward $1,000 or more.

The stock has already been running strong. Targets are chasing the price, which is worth watching.

Analyst upgrades and higher targets were followed by higher earnings, with many companies revising models upward to reflect the stronger-than-expected demand environment in the fiscal fourth quarter.