Seagate’s third quarter results drew a positive market response, propelled by robust demand from data center and edge IoT markets. Management attributed the strong performance to continued double-digit sequential growth in both segments and emphasized record nearline capacity shipments. CEO William Mosley highlighted that data center customers accounted for 90% of shipped capacity, noting, “Our engineering teams work closely with leading cloud providers to align our product road map with future data storage requirements.” The quarter’s profitability gains were supported by a favorable product mix, improved pricing, and disciplined operational execution, with record free cash flow and operating margins reflecting these dynamics.
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Seagate (STX) Q3 CY2026 highlights:
- Revenue $4.23 billion vs S&P analysts’ estimates of $4.14 billion (61% year-on-year growth, 2.2% beat)
- Adjusted EPS $7.68 vs S&P analysts’ estimates of $7.43 (3.4% beat)
- Adjusted EBITDA $2.22 billion vs analyst estimates of $2.10 billion (52.5% margin, 5.8% beat)
- Revenue guidance $4.8 billion at the midpoint for Q4 CY2026, above analyst estimates of $4.5 billion
- Adjusted EPS guidance $9.20 at the midpoint for Q4 CY2026, above analyst estimates of $8.64
- Operating margin 48.8%, up from 26.4% in the same quarter last year
- Inventory days outstanding 86, up from 83 in the previous quarter
- Market capitalization $160.5 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our top 5 analyst questions from Seagate’s Q3 earnings call
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Christopher Muse (Cantor Fitzgerald) asked about the increase in inventory days and exabyte growth trajectory. CEO William Mosley explained the September quarter’s inventory build was to support Mozaic 4 qualifications, with exabyte shipments expected to step up in the following quarter.
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Erik Woodring (Morgan Stanley) inquired about pricing trends and cost per terabyte declines. Mosley attributed strong pricing to ongoing demand and long-term contracts, while Romano cited external component costs as the main headwind to further cost reductions.
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Amit Daryanani (Evercore) questioned whether capital expenditures of 4–6% of revenue could support sustained exabyte growth. Mosley affirmed the current investment level was sufficient, relying on internal technology advancement for efficiency gains.
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Sreekrishnan Sankarnarayanan (TD Cowen) asked about the decision to maintain a 10-platter drive platform instead of expanding. Mosley said there was no technical barrier to increasing platters, but the current approach simplified customer qualifications and manufacturing transitions.
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Mark Newman (Bernstein) probed the sustainability of recent gross margin and pricing gains. Mosley emphasized that demand visibility and product transitions, rather than short-term factors, were driving the upward margin trend.
Catalysts in upcoming quarters
In the coming quarters, the StockStory team will watch (1) the pace and scope of Mozaic 4 and Mozaic 5 customer qualifications and volume ramp, (2) continued progress toward multi-year supply agreements and long-term pricing stability, and (3) Seagate’s ability to manage external component costs while sustaining margin expansion. Execution of capital returns and CapEx discipline will also be important signposts.
Seagate currently trades at $675.90, in line with $670.70 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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