TLDR
- Seagate (STX) fell 4% to $643.59 in premarket trading Wednesday after reporting record quarterly earnings.
- Adjusted EPS came in at $7.68 on revenue of $4.23 billion, both above Wall Street forecasts.
- Second-quarter guidance of $9.20 EPS on $4.8 billion revenue also topped analyst estimates.
- Capital spending of $211 million beat the $202 million analysts expected, a point that worried investors.
- Baird raised its price target to $1,350 from $1,080 and kept an Outperform rating.
Seagate (STX) stock fell 4% to $643.59 in premarket trading Wednesday. The drop came after the hard-drive maker posted record quarterly results. The stock had gained 4% in regular trading on Tuesday.
Seagate Technology Holdings plc, STX
Even with the pullback, the stock has risen 143% so far this year. It is up 201% over the past year, according to Investing.com. Still, it sits 42% below its all-time closing high from June 22.
The results were strong on paper. Seagate earned $7.68 per share in the quarter ended Oct. 2. That compares with $2.61 a year ago and a Wall Street forecast of $7.45, per FactSet.
SEAGATE TECHNOLOGY $STX Q1’27 EARNINGS HIGHLIGHTS
🔹 Revenue: $4.2B (Est. $4.14B) 🟢
🔹 Adj. EPS: $7.68 (Est. $7.42) 🟢
🔹 Gross Margin: 57.8%
🔹 Free Cash Flow: $1.5BQ2 Guide:
🔹 Revenue: $4.8B +/- $100M (Est. $4.53B) 🟢
🔹 Adj. EPS: $9.20 +/- $0.20 (Est. $8.58) 🟢Other Q1… pic.twitter.com/6MeJvq1f4C
— Wall St Engine (@wallstengine) October 27, 2026
Revenue rose 61% from a year earlier to $4.23 billion. Analysts had expected $4.15 billion.
Guidance was also ahead of estimates. Seagate expects second-quarter adjusted earnings of $9.20 per share, plus or minus 20 cents. Analysts had been looking for $8.66.
Revenue guidance came in at $4.8 billion at the midpoint. The Street had penciled in $4.5 billion.
Why Investors Held Back
So why the sell-off? Expectations were sky high after the stock’s run this year. A beat was treated as the baseline, not a reason to buy.
Seagate has ridden the AI wave. Companies need places to store the huge amounts of data AI creates, and hard-disk drives do that job. But storage is a cyclical business, and investors react fast to any sign that demand could cool or supply could grow.
Spending also drew attention. Seagate reported $211 million in capital investments for the quarter, above the $202 million analysts forecast. That figure stays within the company’s long-term target of 4% to 6% of revenue.
Last week, rival Western Digital (WDC) fell after raising questions about its own capital spending, even though it beat earnings expectations. Seagate may be facing a similar reaction.
Costs are another watch point. CFO Gianluca Romano said on the earnings call that some external component costs are much higher than a year ago. That offsets some of the company’s internal cost savings.
“We have to see where the external component cost will go in the future, but what we can control is actually performing very well,” Romano said.
Analyst Reaction
Baird took a more upbeat view. The firm lifted its price target to $1,350 from $1,080 and kept its Outperform rating.
Baird said the stock dropped because exabyte growth slowed for one quarter during a product transition. It expects growth to pick back up this quarter. The firm projects total exabyte growth above 25% for fiscal 2027.
The firm also pointed to December quarter guidance, which includes a fourth straight quarter of year-over-year gross margin gains. Baird said Seagate’s gains exceed those of its competitor.
Investing.com data shows the stock was trading at $667.85 with a market value of $151.86 billion. Its InvestingPro analysis suggests the stock looks overvalued against its Fair Value estimate.
Seagate shares were trading near $644 in premarket action Wednesday, down about 4% from Tuesday’s close.
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