Is Seagate (STX) Stock a Buy After Its Blowout Quarter?

TLDR

• STX rose about 2% intraday to roughly $786 after Q3 earnings crushed estimates — EPS of $4.10 vs $3.51 expected, revenue up 44.1% year-over-year to $3.1 billion.
• Cantor Fitzgerald raised its price target to $1,000, with Morgan Stanley and JPMorgan also lifting targets; consensus sits at “Moderate Buy.”
• Seagate launched a new AI Storage Suite and its second-generation HAMR product, Mozaic 4, delivering up to 44TB per drive.
• Q4 guidance calls for $3.45 billion in revenue and EPS of $5, with gross margins expected to exceed 50% for the first time.
• Multiple insiders sold stock in recent weeks, and the stock carries a high P/E of ~74 and a debt-to-equity ratio of 3.16.

Seagate Technology (STX) had a quarter that’s hard to argue with. The storage giant reported fiscal Q3 2026 earnings of $4.10 per share, well ahead of the $3.51 Wall Street consensus. Revenue came in at $3.1 billion, up 44% year-over-year and above the $2.96 billion estimate. The stock was trading around $786, up roughly 2% on Wednesday.

Seagate Technology Holdings plc, STX

Non-GAAP gross margin hit 47% during the quarter. Management now expects that figure to climb above 50% in Q4 — which would be an all-time high for the company.

Data center revenue drove the headline number. That segment brought in $2.5 billion, up 55% year-over-year, and accounted for 80% of total revenue. Seagate shipped 199 exabytes in the quarter, up 39% year-over-year, with nearline capacity reportedly committed through end of 2027.

Free cash flow for the quarter was $953 million, up 57% from the prior quarter. Trailing twelve-month free cash flow stands at around $2.63 billion.

The Q4 outlook was equally strong. Management guided for revenue of $3.45 billion and EPS of $5, both ahead of prior expectations.

Analyst Upgrades Follow the Beat

Analysts responded quickly. Cantor Fitzgerald raised its price target from $700 to $1,000, assigning an “overweight” rating. Morgan Stanley moved its target from $582 to $767, and JPMorgan lifted theirs from $525 to $775, both also “overweight.” Loop Capital went from $700 to $800.

Consensus now sits at “Moderate Buy” with an average price target of $709.13 — already below where the stock is trading.

On TipRanks, STX holds a “Strong Buy” from 17 analysts over the past three months, with 14 buys and 3 holds.

HAMR Technology in Focus

Part of the bull case rests on Seagate’s heat-assisted magnetic recording (HAMR) platform. Mozaic 4, the second-generation product, began shipping in late March 2026 and offers up to 44TB per drive — about 30% more than its predecessor. Management expects it to represent the majority of HAMR exabyte shipments by the end of calendar 2026.

The next product, Mozaic 5, targets 50TB per drive with qualification shipments expected in late 2027.

Seagate also launched an AI Storage Suite across its Seagate, FireCuda, and LaCie product lines, featuring up to 256TB configurations and Thunderbolt 5 support.

On the balance sheet, the company retired $641 million in gross debt during Q3, bringing year-to-date debt reduction to around $1.1 billion. Net leverage improved to 0.7x, and Fitch recently upgraded Seagate’s credit rating.

That said, investors should note a few things. The stock carries a P/E ratio of around 74.6 on trailing earnings and a debt-to-equity ratio of 3.16. Several executives and directors also sold stock in recent weeks, including EVP James Ci Lee reducing his position by 68%.

The average analyst price target of $709.13 sits below current trading levels, though forward estimates — with EPS expected at $5 next quarter — put the forward P/E closer to 30x.

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