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Behind the Markets
Seagate Technology Leads S&P 500: What's Behind Its 120% Gain?
Written by Dan Schmidt. Published 9/11/2025.
Key Points
- The biggest gainer in the S&P 500 this year is now Seagate Technologies, whose stock is up 120% so far in 2025.
- Seagate designs and sells sophisticated hard drives capable of holding up to 36 terabytes of capacity.
- Data centers crave more and more capacity from their drives, and Seagate's impressive earnings show it's at the top of this industry.
What would be your first guess if told the S&P 500's biggest gainer of the year was an artificial intelligence play? Before reading this headline, you might have thought of Palantir, NVIDIA, or perhaps Broadcom.
True, all three of those stocks have delivered stellar gains in 2025, but none can claim the top spot among the 500 largest U.S.-listed companies.
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That distinction (for now) belongs to Seagate Technologies Holdings plc (NASDAQ: STX), which has surged more than 120% so far this year.
Can this rally continue, or is the stock beginning to lose steam? Read on to learn more about the S&P 500's newest top performer.
Seagate HDDs Drive AI Data Centers
Seagate Technologies is now a $40 billion company, generating over $9 billion in revenue over the past 12 months, primarily driven by its hard disk drives (HDDs) and solid-state drives (SSDs) across a diverse product lineup.
The recent innovation capturing investors' attention is the Heat-Assisted Magnetic Recording (HAMR) HDD, which Seagate began shipping in July. Building on the Mosaic HDDs introduced last year, HAMR drives deliver industry-leading capacity.
AI data centers require vast power, advanced processors, and storage with Herculean capacity. Seagate's HAMR drives can store between 30 and 36 terabytes each, the highest capacity in the industry.
As data center storage demands grow, these drives provide a cost-effective alternative to flash memory with a lower price per terabyte—clear evidence in Seagate's recent earnings results.
Robust Earnings Growth Fuels Analyst Optimism
Tech sector earnings reports have become must-watch events, and Seagate's Q4 2025 release deserves similar attention. Seagate reported Q4 2025 earnings on July 29 after the market closed, delivering a double-digit beat on both the top and bottom lines and setting a record for annual revenue.
For the quarter ended June 30, revenue came in at $2.44 billion and EPS was $2.59, marking the fourth time this fiscal year Seagate surpassed $2 billion in quarterly revenue. That represents 13% growth from the prior quarter and nearly 30% year-over-year. Management expects this momentum to continue.
Seagate recently surveyed executives across 15 industries and found that 61% of respondents project their cloud storage needs will double by 2028.
Seagate plans to return $600 million to $800 million to shareholders via dividends, along with an additional $5 billion in share repurchases.
The current dividend yield is 1.50%, and the last increase occurred in October when quarterly payments rose to $0.72 per share from $0.70. Seagate also generated over $475 million in free cash flow in June, providing ample firepower for further shareholder returns.
Analysts remain highly bullish on STX shares, with 14 Buy ratings, five Holds, and one Sell among the 19 research firms tracked by MarketBeat.
However, consensus price targets have lagged market gains. The $157 average target sits 18% below the current share price. On Sept. 9, Citigroup took the lead by raising its target to a Street-high $215.
Technical Signals Indicate Strong Upward Momentum
STX shares dipped to $66.54 on April 8 before a pause in proposed tariffs sparked a rally. The stock cleared the $190 level earlier this week, and technical indicators suggest momentum is intact.
The share price has moved above all major moving averages—20-, 50-, 100-, and 200-day simple moving averages—since May.
After encountering resistance near $155 in August, STX broke out again as it bounced off its 50-day moving average.
A bullish MACD crossover confirms the latest breakout, indicating renewed upward momentum.
Outlook for 2026 Depends on Continued AI Growth
Most signs point to further gains through 2026, but investors should note valuation concerns. Seagate now trades above historical averages at more than 3x sales and 28x forward earnings.
Additionally, Q1 2026 guidance came in slightly below expectations, causing the stock to dip 3% the day after its Q4 earnings release.
Though the price quickly recovered, this pullback shows that investors demand near-perfect results.
Another risk is Seagate's reliance on AI hyperscalers, which have been heavy CapEx spenders. A slowdown in AI infrastructure spending could significantly impact Seagate's revenue. However, the macro outlook remains strong, and analysts at Morgan Stanley recommend buying dips.
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