Seagate Technology Stock (STX) Good Growth and Good Value (Q4 2025 Earnings)

Seagate Technology (NASDAQ: STX) has delivered a standout Q4 2025 earnings report that demonstrates strong growth in revenue and cash flow, with valuation metrics still appearing attractive. Despite a modest dip in EPS this quarter, the company’s robust operating performance, powerful tailwinds from AI/cloud storage demand, and reasonable valuations make Seagate a compelling investment opportunity heading into fiscal 2026. In this article we will dive into Seagate Technology recent earnings, stock performance & valuation, growth potential, and the risks investor should consider.

About Seagate Technology

Founded in November 1979 as Shugart Technology, Seagate Technology Holdings plc is a leading global provider of data storage solution. Headquartered operationally in Fremont, California (legally domiciled in Dublin, Ireland), Seagate designs and manufactures hard‑disk drives (HDDs), hybrid drives, and SSDs used across consumer, enterprise, and hyperscale cloud environments. Its dominance in HDDs bolstered by acquisitions of Maxtor, Conner, and Samsung’s HDD division, positions it as a key supplier to hyperscalers and storage-intensive industries.

Seagate Financial Performance

Seagate Technology reported strong financial performance in Q4 2025 which end in June 2025, with quarterly revenue reaching $2.44 billion, a 29.52% increase compared to $1.88 billion in Q4 2024. However, earnings per share (EPS) for the quarter slightly declined by 6.05%, from $2.38 to $2.24. On a trailing twelve-month (TTM) basis, the company posted $9.09 billion in revenue, reflecting a 38.86% year-over-year increase from $6.55 billion. TTM EPS surged by 328.48%, rising from $1.58 to $6.77, indicating a significant recovery in profitability. Additionally, free cash flow per share (TTM) grew 20.45%, from $3.13 to $3.77. Seagate maintained healthy margins, with a gross profit margin of 35.18%, net profit margin of 16.15%, and free cash flow margin of 8.99%. The company also demonstrated strong operational efficiency, delivering a 15% return on assets and maintaining a manageable debt-to-EBITDA ratio of 2.33.

Over the past five years, STX's financial performance has declined since its peak in 2022, but it began to grow its revenue, net income, and free cash flow rapidly again in 2025.

Seagate Fiscal 2026 Financial Forecast

Looking ahead, analysts forecast Seagate's revenue to reach $10.36 billion in fiscal 2026, representing a 13.91% increase from 2025, and project a non-GAAP EPS of $10.14, a 25.14% increase from $8.10. The stock carries a consensus “Buy” rating, with an average price target of $158.42, suggesting a 7.46% upside, while the highest target of $200 implies a potential gain of 35.66%.

STX Stock Price Performance and Valuation

At the time this article was written, the stock was trading at $147.42 per share. Seagate Technology's stock has shown impressive performance with a 48.7% gain over the past year, significantly outperforming the S&P 500's 17% increase in the same period. Over the past five years, the stock has climbed 226%, again outpacing the S&P 500’s 94.3% gain, highlighting strong long-term investor returns. 

In addition to capital appreciation, the stock offers a 1.95% dividend yield, providing additional income for shareholders. From a valuation standpoint, Seagate remains attractively priced relative to its growth. It currently trades at a TTM price-to-sales (P/S) ratio of 3.76 and a forward P/S of 3.57. The non-GAAP price-to-earnings (P/E) ratio stands at 23.27 TTM and the forward P/E is 19.22, which is compelling given the strong earnings forecast. While the price-to-free cash flow (P/FCF) TTM ratio is 38.39.

Based on Fiscal.ai data, if we look at the valuation over the past five years, the forward P/S is above the average, the forward P/E is below the average, and the P/FCF is above the average. The forward P/E indicates that Seagate stock may be undervalued, as earnings are still projected to grow rapidly.

Seagate Growth Potential

Seagate growth potential remains robust, driven by several factors.

• Accelerating AI and Cloud Storage Demand
  Seagate reported Q4 revenue of $2.44 billion, up 29.5% year-over-year, driven primarily by strong demand from hyperscale cloud and AI workloads that require high-capacity, cost-effective storage solutions. As global data generation is projected to exceed 180 zettabytes by 2025, Seagate’s nearline hard disk drives (HDDs), which represent 88% of its HDD revenue, are crucial for scalable and energy-efficient archival and AI training storage. The growing adoption of AI in enterprises is further boosting demand for mass-capacity drives. Seagate’s advanced 20 TB+ HDDs and upcoming 44 TB HAMR (Heat-Assisted Magnetic Recording) products offer superior storage density per rack unit, appealing to major cloud providers. Continuous qualification of these drives by top hyperscalers has led to a 52% year-over-year increase in exabyte shipments to 137 EB, ensuring sustained revenue momentum into fiscal 2026 and beyond.
• HAMR Technology Leadership
  Seagate’s Heat-Assisted Magnetic Recording (HAMR) technology, now in high-volume production, marks a significant breakthrough after a decade of development, enabling hard drives with capacities ranging from 24 TB to 44 TB. In Q4, Seagate achieved record gross margins of 37.9%, rising 170 basis points sequentially, partly due to HAMR’s favorable product mix and improved cost efficiencies. The company has successfully qualified three major cloud customers on the HAMR 3+ platform, with Mosaic-4 qualification actively progressing. This positions Seagate to capture a substantial share of the expanding market for high-density storage drives. Competitors currently lack comparable capacity offerings, giving Seagate a significant technological advantage, or “moat.” As manufacturing yields improve and production scales further, Seagate anticipates an additional gross margin gain of 200 to 300 basis points, which will drive stronger profitability through fiscal year 2026 and beyond.
• Strengthened Financial Health and Cash Generation
  In Q4, Seagate’s free cash flow doubled sequentially to $425 million, while operating cash flow increased to $508 million, supported by a lean capital expenditure of just 3% of revenue. During this period, the company reduced its gross debt by $150 million and closed the quarter with $2.2 billion in liquidity. With a net leverage ratio of 1.8×, Seagate maintains strong financial flexibility to pursue strategic investments and return value to shareholders. The management plans to restart share repurchases in the first quarter, complementing the $153 million paid in dividends during Q4. This disciplined approach to capital allocation balances funding for research and development of next-generation technologies with shareholder returns, ultimately supporting earnings per share growth while maintaining a healthy financial position to capitalize on future growth opportunities.

Risks to Consider

While Seagate stock looks like a compelling opportunity, we should be mindful of potential risks.

• Financial Leverage and Debt Levels
  Seagate is highly leveraged, with a debt-to-equity ratio of about 2.27 in early 2024, and its total liabilities exceed total assets. The company’s interest expenses are not sufficiently covered by operating cash flow, and dividends lack strong coverage. This financial structure raises concerns about Seagate’s stability and increases the risk of financial distress, especially if cash flow weakens or market conditions worsen.
• Industry Competition
  The data storage sector is highly competitive, with Seagate facing rivals like Western Digital (WDC), which has substantial financial resources. This competition puts pressure on pricing, margins, and market share. As a leading company in hard drives and storage solutions, Western Digital’s strong presence continues to challenge Seagate’s market position. Such intense rivalry remains a core operational risk for Seagate, impacting its growth and profitability prospects.
• Regulatory and Operational Risks
  Changing regulations around data privacy, environmental standards, and manufacturing materials can raise compliance costs and possibly restrict operations for Seagate. Moreover, operational threats include supply chain disruptions, manufacturing delays, or product development setbacks caused by geopolitical tensions, natural disasters, or technical failures. These risks could negatively impact production efficiency and overall business performance, making regulatory and operational challenges significant concerns for Seagate’s ongoing stability and growth.

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Conclusion

Seagate Technology presents a compelling investment case with strong revenue and earnings growth, solid margins, and consistent free cash flow. The stock has significantly outperformed the broader market, yet its valuation remains attractive relative to future growth expectations. Backed by innovation in high-capacity storage and rising demand from AI and cloud markets, Seagate is well-positioned for continued expansion. Despite some risks, its financial strength and positive outlook make STX a worthy consideration for investors seeking growth and value.