Seagate Technology Holdings plc STX

The business

Seagate makes high-capacity hard drives for cloud data centers, a market that is effectively a duopoly with Western Digital after decades of brutal consolidation. AI changed the demand curve: models generate and retain oceans of data that live on disk because flash costs several times more per terabyte at this tier. Supply changed too, and this is the crux: both vendors now sell out capacity a year or more ahead through build-to-order agreements, and Seagate's HAMR technology, which raises capacity per platter, extends the cost lead. Pricing power in a formerly commodity business is the entire margin story above.

The guide keeps climbing: next quarter at $4.1B of revenue and $7.30 of adjusted earnings, which annualizes near $29, and consensus reaches $36 for fiscal 2027 and $56.52 for fiscal 2028. At $846.37 that is roughly 61 times the year just reported, 23 times next year's estimate, and 15 times the 2028 number, a valuation ladder in which the out-years do all the work. Capital return is modest against the move, $810M of dividends and buybacks last year, with $1.4B of debt retired and the dividend nudged to $0.74 quarterly.