We came across a bullish thesis on Seagate Technology Holdings plc on Uncle Stock Notes’s Substack. In this article, we will summarize the bulls’ thesis on STX. Seagate Technology Holdings plc’s share was trading at $407.00 as of February 27th. STX’s trailing and forward P/E were 48.02 and 33.33 respectively according to Yahoo Finance.
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Seagate Technology Holdings plc engages in the provision of data storage technology and infrastructure solutions in Singapore, the United States, the Netherlands, and internationally. STX is redefining its role in the AI-driven storage market, moving from a traditional cyclical HDD player to a growth-oriented infrastructure provider.
The company’s latest Q2 2026 results underscore this transformation, with revenue of $2.83 billion and non-GAAP EPS of $3.11, significantly beating expectations. Gross margins of 42.2% highlight Seagate’s pricing power, production discipline, and the long-term lock-in of nearline storage demand.
CEO Dave Mosley confirmed that nearline capacity is fully booked through 2026, signaling unprecedented visibility and a binding relationship with hyperscalers, including Microsoft, Google, and Amazon, who require vast amounts of affordable, long-term storage for AI workloads. HAMR technology, with single-platter capacities exceeding 30TB, provides the cost-effective, high-capacity solution needed to store the massive historical datasets underpinning agentic AI, positioning Seagate as a critical “long-term memory” provider for next-generation AI architectures.
Financially, Seagate combines strong cash generation with disciplined capital allocation. Free cash flow reached $607 million, operating cash flow $723 million, and the company maintained a $1 billion cash balance while repaying $500 million in debt and sustaining dividends of $0.74 per share. With Q3 revenue guidance of $2.9 billion and EPS of $3.40, the company demonstrates high visibility and pricing leverage.
Valuation metrics suggest that while STX trades at a forward P/E of 29.5x, reflecting optimism around AI-driven storage demand, traditional cyclical valuations would have implied roughly half the current stock price. Despite potential risks from SSD price erosion, macroeconomic slowdowns, or HAMR engineering setbacks, Seagate’s strategic positioning, full capacity utilization, and long-term contracts create a compelling narrative. For investors, the combination of robust earnings, durable competitive advantages, and AI-driven secular growth positions STX as a high-conviction play in the evolving storage landscape, offering both short-term momentum and long-term optionality as the digital data wave continues to expand.
