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Seagate (STX) Stock Price Meets Record Q1 Earnings With Valuation Doubts

Simply Wall St · 2d ago

Seagate Technology walked into this Q1 2027 print with a stock that had cooled off over the past month, drifting about 23% lower even as the last week turned slightly positive. Then the company reported a storage heavyweight result. Revenue reached US$4.2b and non GAAP earnings per share hit US$7.68, alongside record gross and operating margins that most hardware makers would envy.

Yet the share price barely budged, up only 0.36% on the day. That muted move suggests investors are focusing not on whether the quarter was strong, but on whether this margin profile is durable enough to justify an already rich P/E multiple.

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Q1 2027 Earnings Summary

  • Revenue (Q1 2027 vs. Q1 2026): US$4,233m vs. US$2,629m (up about 61%)
  • Net Income (Excl. Extra Items, Q1 2027 vs. Q1 2026): US$1,761m vs. US$549m (more than tripled)
  • Basic EPS (Q1 2027 vs. Q1 2026): US$7.72 vs. US$2.58 (around 3x higher)
  • Trailing Net Profit Margin (Last 12 Months vs. Prior Year): 31.9% vs. 17.9% (meaningfully higher profitability on recent results)

Prefer clean charts instead of another wall of dense financial text? See Seagate Technology Holdings' full visual breakdown, with a focus on its valuation picture, through the company report for Seagate Technology Holdings.

NasdaqGS:STX Trailing 12-Month Revenue & Expenses Breakdown as at Oct 2026
NasdaqGS:STX Trailing 12-Month Revenue & Expenses Breakdown as at Oct 2026

Seagate’s Bull Story Measured Against Q1 Milestones

The bullish pitch hinges on Seagate Technology turning AI data growth and Mozaic into durable share and margin gains.

"Bullish analysts expect Seagate Technology Holdings to convert structurally compounding AI and video-driven data growth, along with accelerated HAMR-based Mozaic adoption, into sustained gains in revenue share and gross margins within the HDD market."

Q1 gives that idea real support. Data center shipments reached 198 EB, or 90% of total capacity, while edge/IoT revenue was US$784m. Record gross and operating profitability, plus record free cash flow near US$1.5b on only 5% CapEx intensity, indicates that Mozaic and tight supply are already translating into richer economics rather than just higher volume.

One Narrative disagrees with today's price. → See where this Narrative says Seagate Technology Holdings should trade.

Bear Case On Seagate’s Pricing Power Meets Reality

Bearish analysts argue Seagate Technology’s HDD edge could fade as rivals ramp capacity and hyperscalers regain leverage.

"Although Seagate Technology Holdings is currently benefiting from tight HDD supply and value based pricing, Toshiba’s plan to double HDD production capacity by fiscal 2027 targeted at AI data centers could ease the supply constraint and force price concessions that compress gross margins and weaken earnings growth."

The Q1 print offers no sign yet of that margin squeeze. Gross and operating profitability both hit record levels while Mozaic driven exabyte shipments and tight supply supported value based pricing. The risk is still live though. Guidance leans on continued supply discipline, so Toshiba’s build out remains a clear milestone not yet tested in these numbers.

Hunt For Quiet Mispricings

Seagate Technology Holdings reported a strong quarter that the share price did not fully reflect. The real opportunity could sit in stocks that the market has not yet comprehensively re-priced.

  • Company 1 - 16% below our estimate - uses expanding manufacturing capacity to take on higher value photonics and advanced packaging work for AI heavy data center programs.
  • Company 2 - 31% below our estimate - converts large optical and solar orders, with customer prepayments and long contracts, into more capital efficient communications and energy infrastructure projects.
  • Company 3 - 43% below our estimate - scales emerging market payment volumes as large merchants expand onto its platform and adopt higher margin services to offset fee pressure.

Those are three of them. See the full list of 30 companies trading below our fair value estimates →