Seagate Technology (STX, Financial) kicked off fiscal 2025 with a bang, posting a near 49% revenue surge to $2.17 billion in Q1, signaling a solid recovery in the data storage market. The company hit its highest gross margin in over a decade, reaching 33.3%, driven by the rapid rollout of 28-terabyte nearline drives and a growing list of cloud customers adopting its HAMR-based products. CEO Dave Mosley didn't hold back, emphasizing Seagate's relentless push to capitalize on booming cloud demand, and backing up that confidence with a 3% hike in the quarterly dividend.
Not everyone is convinced, though. Susquehanna kept its Negative rating on the stock, pointing to ongoing market challenges that could cap earnings growth. But some bulls are charging. Rosenblatt Securities upped its price target to $140, highlighting Seagate's earnings beat as proof of strong demand momentum across cloud and enterprise markets. Morgan Stanley echoed this bullish outlook, noting that Q1's HDD shipments blew past expectations, thanks to rising enterprise orders and robust cloud growth, setting up the company for a strong fiscal 2025.
Looking ahead, Seagate is guiding for Q2 revenue around $2.30 billion, with expectations for more margin expansion and profit growth. The key for investors will be watching how well Seagate can keep scaling its innovations to meet surging cloud and enterprise demand while navigating the ups and downs of the storage industry. As momentum builds, the company seems poised to deliver – but execution will be everything.
