Robust Storage Demand, Seagate's Earnings Soar Past Expectations with an 18% Surge After Hours

Local time on April 28th, after the US stock market closed, hard disk giant Seagate Technology released its financial report for the third quarter of fiscal year 2026, with revenue, profits, and next-quarter guidance all exceeding Wall Street expectations. After the news was announced, Seagate's stock price soared by more than 18% in the after-hours trading, while its competitor Western Digital increased by about 11%, SanDisk by about 4%, and Micron Technology also rose by about 3.5%.

The synergy within the entire storage sector reflects the market's repricing of a core issue: How long can AI-driven storage demand last? Seagate's financial report seems to have provided an answer - at least not yet.

The CEO of Seagate Technology announced that storage has entered a "new era of structural growth," raising the annual revenue growth target from low to mid-double digits to at least 20% for the next few years; nearline hard drive capacity has almost all been pre-sold to 2027.

Financial report highlights: Revenue increased by 44% year-on-year, cash flow hit a decade high

In this quarter, Seagate's revenue was $3.11 billion, representing a year-on-year increase of 44%, exceeding analysts' expectations of $2.96 billion.

The performance on the profit side was even more impressive. Non-GAAP earnings per share were $4.10, a 115% increase from the $1.90 of the same period last year, significantly surpassing the market expectation of $3.51. GAAP earnings per share were $3.27, compared to $1.57 in the same period last year.

In terms of gross margin, the non-GAAP gross margin reached 47%, up 480 basis points from the previous quarter; the non-GAAP operating profit margin expanded to 37.5%, up 560 basis points from the previous quarter.

(Graphic source: Seagate Technology official website, after Chinese localization treatment, the same below)

Cash flow was another highlight of this quarter. Seagate generated free cash flow of $953 million, a significant increase year-over-year, CFO Gianluca Romano said in a conference call, "This is the highest level in over a decade." At the same time, the company repaid $641 million of debt in this quarter and returned $191 million to shareholders through dividends and repurchases.

Guidance blew up the market: Next quarter's EPS guidance was 26% higher than expected

What the market is really excited about is the guidance Seagate gave for the fourth quarter.

The company expects fourth-quarter revenue of $3.45 billion (plus or minus $100 million), while analysts had previously expected only $3.16 billion; the non-GAAP earnings per share guidance is $5.00 (plus or minus $0.20), while analysts expected $3.97.