Seagate tops quarterly estimates and issues blockbuster first-quarter guidance

Investing.com -- Seagate Technology PLC (NASDAQ: STX) shares surged 7.4% in after-hours trading Tuesday after the data storage giant posted fourth-quarter earnings and sales that comfortably topped Wall Street estimates and delivered an upbeat outlook for the upcoming fiscal year.

The company posted adjusted fourth-quarter earnings of $5.71 per share on revenue of $3.6 billion, representing a 49% year-over-year top-line expansion from $2.4 billion in the prior-year period. Wall Street analysts had been anticipating earnings per share of $5.09 on revenue of $3.5 billion, according to consensus estimates.

Growth was catalyzed by accelerating demand across cloud data centers as hyperscalers and enterprise customers continue to expand infrastructure to support artificial intelligence and data-heavy workloads. Profitability expanded rapidly alongside top-line growth, with non-GAAP gross margin climbing to 52.7% from 37.9% in the same quarter last year.

Looking ahead, Seagate issued ambitious guidance for its fiscal first quarter of 2027 that significantly outstripped market expectations. The company projected revenue of $4.1 billion, plus or minus $100 million, alongside non-GAAP diluted earnings per share of $7.30, plus or minus $0.20, compared to consensus estimates of $3.8 billion and $5.87, respectively.

Management attributed the robust operational trajectory to long-term tailwinds surrounding cloud storage and exabyte growth. Chief Executive Officer Dave Mosley highlighted the role of the company's proprietary Mozaic platform and Heat-Assisted Magnetic Recording (HAMR) roadmap in positioning Seagate to capture high-margin demand as AI workloads accelerate data generation globally.

For the full fiscal year 2026, Seagate generated $12.2 billion in revenue and delivered non-GAAP diluted earnings per share of $15.58, representing sharp gains over fiscal 2025 results. Annual cash generation reached record levels, with operating cash flow hitting $3.7 billion and free cash flow reaching $3.1 billion.

The strong cash generation allowed the storage provider to reinforce its balance sheet while maintaining shareholder returns. Seagate retired $1.4 billion in total debt over the fiscal year, including $302 million during the fourth quarter, exiting the period with $3.6 billion in total debt, $1.7 billion in cash and cash equivalents, and a declared quarterly dividend of $0.74 per share.

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