Seagate Technology’s shares surged in premarket trading on Wednesday after the hard drive maker forecast third-quarter revenue and profit above Wall Street expectations.
The stock rose 10.3% to $410.05 before the opening bell.
Seagate had already closed at a fresh record high in the previous session, ahead of quarterly results released after the market close.
Seagate forecast third-quarter revenue of $2.90 billion, plus or minus $100 million, compared with analysts’ estimates of $2.77 billion, according to data compiled by LSEG.
It also projected adjusted earnings per share of $3.40, plus or minus 20 cents, well above the consensus forecast of $2.96.
The outlook followed a solid second quarter. Revenue came in at $2.83 billion, beating estimates of $2.73 billion.
On an adjusted basis, the company earned $3.11 per share, compared with expectations for a $2.81 profit.
AI spending reshapes storage demand
Tech firms are investing hundreds of billions of dollars into data centres and related infrastructure, a trend that has reshaped demand across the hardware supply chain.
While much of the focus has been on chips and servers, the vast volumes of data generated and processed by AI systems also require large-scale, cost-efficient storage.
Seagate, whose hard disk drives are widely used in hyperscale data centres, has emerged as a key beneficiary.
Its shares surged 219% in 2025, while rival Western Digital was the top-performing stock in the S&P 500 last year, gaining 282%.
“As AI applications amplify the creation and economic value of data, modern data centres increasingly need storage solutions that combine performance and cost-efficiency at exabyte scale,” chief executive Dave Mosley said in a statement.
He added that the company’s product roadmap, driven by advances in areal density, positions it to meet long-term demand growth.
Industry growth and pricing outlook
Earlier this month, Morningstar analysts said they expect the hard disk drive industry to grow at a low-teens average rate over the next several years, as falling prices are offset by rising volumes of storage shipped.
During Seagate’s earnings call, analysts questioned executives on pricing and the ramp-up of its heat-assisted magnetic recording, or HAMR, technology.
Management said pricing is expected to remain flat to slightly higher, with strong demand visibility extending into 2027 and 2028.
The company said its focus remains on driving exabyte growth through improvements in areal density, a strategy it believes reinforces its leadership in high-capacity storage for data centres.
Analyst sentiment broadly positive
Seagate’s upbeat outlook also lifted Western Digital shares, which rose 8.3% to $273.50 in premarket trading.
Last week, BofA Securities raised its price targets on both companies, maintaining buy ratings.
BofA lifted its target on Seagate to $400 from $320, citing continued strength in data centre revenue, some seasonal improvement in video and image applications, and firmer consumer demand.
It raised its target on Western Digital to $257 from $197, expecting shipments of more than 200 exabytes of storage capacity.
According to LSEG data, 21 of 26 brokerages rate Seagate’s stock buy or higher, with five recommending hold.
The median price target stands at $385, below the stock’s premarket level.
Even former sceptics have turned more constructive.
Earlier this month, Susquehanna upgraded Seagate to neutral from negative and raised its price target to $280 from $150, acknowledging that its earlier bearish view of the hard drive industry had proved incorrect.
The firm said demand for commercial-scale drives has exceeded expectations and described Seagate’s transition to its next generation of magnetic recording technology as near-flawless.
It now sees the market for high-capacity hard drives growing at a 25% annual rate through 2028, with the next peak in shipments likely in mid-2027.
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