Why Seagate Is Wall Street's New Favorite AI Infrastructure Play
Written by Jeffrey Neal Johnson. Published 9/18/2025.
Key Points
- Multiple influential Wall Street analysts recently issued Strong Buy ratings and ambitious new price targets for Seagate Technology.
- Explosive demand for data storage from the artificial intelligence industry is already driving significant revenue and profit growth for the company.
- The company's next-generation HAMR storage technology gives it a crucial advantage in meeting the future data needs of its largest cloud customers.
A wave of analyst upgrades sent shares of Seagate Technology (NASDAQ: STX) soaring over 7% in a single session, driving the stock to a new 52-week high. While the double-digit price target increase is impressive, the market's reaction underscores a far bigger story.
Investors aren't just focused on one data point—they see a broader trend: providers of AI's foundational infrastructure are being fundamentally revalued.
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Click here now to see how AI is coming to life.This shift suggests that the recent upswing in Seagate's share price could mark the beginning of a sustained, long-term rally.
The Analyst Domino Effect
Bank of America's $215 price target adds momentum to a growing chorus of bullish outlooks. Benchmark and Sanford C. Bernstein both initiated coverage with Outperform ratings and price targets as high as $250 per share. Even after delivering over 140% year-to-date gains, Seagate continues to attract higher forecasts.
Such a "re-rating" occurs when the market looks beyond historical performance and values a stock based on a fundamental shift in its growth trajectory. A broadening analyst consensus often precedes increased institutional interest and can sustain higher valuations over time.
How AI's Thirst for Data Drives Demand
The catalyst for this revaluation is the central role of data storage in the AI revolution. AI models consume vast amounts of data from two key sources:
- AI Training: Large Language Models (LLMs) require massive historical datasets to learn, all stored on high-capacity drives in data centers.
- AI Generation: Generative AI applications produce immense volumes of new, unstructured data—from text and code to images and video—that must be efficiently captured and stored.
Seagate's fourth quarter and full fiscal 2025 results underscore this dynamic. Mass capacity revenue from high-capacity drives, sold directly to cloud and data center clients building AI infrastructure, topped $2.0 billion in the quarter—proof that AI demand is already a powerful revenue driver.
The company reported nearly 40% annual revenue growth to $9.10 billion and non-GAAP diluted EPS of $8.10. It also generated $818 million in free cash flow, fueling both innovation and shareholder returns.
HAMR: Seagate's Edge in Storage Density
To manage exponential data growth, storage technology must evolve. Seagate's investment in HAMR (Heat-Assisted Magnetic Recording) is its answer. This next-generation method significantly increases storage density by packing more data onto each disk.
Higher-density drives lower the total cost of ownership (TCO) by reducing expenses for real estate, power and cooling. With HAMR-based products already shipping and major cloud providers qualifying the technology, Seagate holds a critical lead in supporting advanced AI workloads.
Putting Executive Stock Sales in Perspective
Recent SEC filings show insiders selling shares under pre-scheduled 10b5-1 plans for diversification and personal financial management. Such transactions are routine and don't alter the broader market demand story that's driving Seagate's re-rating.
Why This Is Just the Beginning
Seagate is evolving from a traditional hardware supplier into a cornerstone of the AI infrastructure ecosystem. Without mass-capacity storage, the AI boom couldn't happen. That reality is reflected in the recent wave of analyst upgrades and the stock's robust performance. Management's guidance targets $2.50 billion in revenue for Q1 fiscal 2026, signaling continued confidence.
For investors, Seagate represents a durable pick-and-shovel play on the defining technological shift of the decade.
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