Story
Seagate Issues Strong Forecast as AI Boom Fuels Storage Demand
Summary
The storage device maker projected first-quarter revenue and profit well above Wall Street estimates, citing robust demand for its high-capacity drives from the AI sector, sending its shares higher in after-hours trading.
Seagate Technology on Tuesday issued a first-quarter revenue and profit forecast that significantly surpassed analyst expectations, signaling that surging demand for artificial intelligence infrastructure continues to fuel sales of its high-capacity storage drives. The company's shares rose over 8% in extended trading following the announcement.
Upbeat Guidance and Results
Seagate projected strong performance for its upcoming first quarter, providing guidance that topped market consensus.
- First-Quarter Revenue Forecast: $4.1 billion, plus or minus $100 million, well above the average analyst estimate of $3.75 billion, according to LSEG data.
- First-Quarter Adjusted Profit Forecast: $7.30 per share, plus or minus 20 cents, compared to the consensus estimate of $5.80 per share.
The optimistic outlook follows a robust fourth quarter, where Seagate also beat expectations. The company reported revenue of $3.63 billion, a 48.5% increase, surpassing estimates of $3.49 billion. Adjusted profit for the quarter was $5.71 per share, ahead of the $5.09 analysts had anticipated.
AI Driving Mass Storage Needs
AdThe strong results and forecast are directly linked to the rapid buildout of infrastructure needed to support generative AI applications. Large cloud companies require vast amounts of storage for these data-intensive models, driving demand for Seagate's hard disk drives (HDDs) and allowing the company to raise prices.
"As AI accelerates data generation and its value, we see durable long-term demand for mass capacity storage," CEO Dave Mosley said. Seagate has capitalized on this trend with its heat-assisted magnetic recording (HAMR) technology, which uses lasers to pack more data onto each disk, increasing storage capacity efficiently.
Market Context
The positive forecast adds to a strong year for Seagate investors. The company's stock has more than doubled in value this year, buoyed by the sustained demand from the AI sector. The latest results suggest that momentum is set to continue as data storage remains a critical component of the ongoing AI expansion.
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