Evercore compares Seagate and Western Digital hard drive results

Investing.com -- Evercore published a quarterly analysis comparing Seagate Technology and Western Digital's hard disk drive performance for June 2026, highlighting differences in exabyte shipment growth and gross margin trends.

Seagate grew exabyte shipments by 34% year-over-year to 218EB, while Western Digital posted a 22% year-over-year increase to 231EB. The gap was larger in the nearline segment, where Seagate's shipments rose 43% year-over-year to 195EB compared to Western Digital's 23% increase to 209EB.

Western Digital management said the slower growth reflected customer drive mix, with larger customers choosing a heavier CMR mix that limits exabytes-per-unit versus an ultraSMR-weighted mix. The company maintains its long-term exabyte growth target of approximately 25% as it ramps its 40TB ePMR drive and 44TB HAMR product, which is expected to ship in the first half of calendar year 2027.

Seagate's implied gross margin incrementals exceeded 90%, with gross margins of 57-58%, while Western Digital's margins reached 55.5% with approximately 67% incrementals. Western Digital has beaten the high end of its gross margin guidance by roughly 200 basis points over the last six quarters.

On HAMR technology, Seagate is ramping Mozaic 4 at two large cloud service providers, with its first platform already in volume production. Western Digital is shipping 40TB ePMR drives with volume ramp expected in coming quarters, and has HAMR in qualification with four customers.

Blended pricing rose 10.6% year-over-year for Seagate and 18.4% for Western Digital.

Western Digital returned approximately 88% of free cash flow to shareholders in fiscal year 2026, primarily through buybacks. Seagate returned roughly 26% of free cash flow to shareholders, directing the remainder to debt reduction. The company retired $1.4 billion in debt in fiscal year 2026, reducing leverage from 1.8x to 0.4x.

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