$STX · Seagate Technology Holdings plc
Seagate Technology filed its 10-Q for Q1 FY2027 (ended October 2, 2026), reporting revenue of $4.233B (+61% YoY), net income of $1.761B (vs $549M), and diluted EPS of $7.59 (vs $2.43). Operating cash flow reached $1.690B. The company redeemed $1.262B in debt, repurchased $400M in shares, and paid $168M in dividends. Shareholders' equity improved to $3.453B from a $63M deficit a year ago.
- Revenue of $4.233B, up 61% YoY from $2.629B, driven by mass-capacity storage demand for AI infrastructure
- Net income tripled to $1.761B vs $549M a year ago; diluted EPS of $7.59 vs $2.43
- Operating margin expanded to 48.8% from 26.4%, with income from operations of $2.064B vs $694M
- Operating cash flow surged to $1.690B from $532M; $1.262B in debt redemption/repurchase executed
- Shareholders' equity swung from a $63M deficit a year ago to $3.453B; $400M in share repurchases this quarter
Extended-hours trading shows STX at $677.99, down 3.21% vs the regular close of $700.47 — a sell-the-news reaction despite blockbuster results, possibly reflecting profit-taking after the stock's massive run or concern about the $44M net loss from debt transactions and $446M cash burn from combined debt redemption and buybacks.
Seagate just printed one of the strongest quarters in its history — revenue up 61%, net income tripled, and operating margin nearly doubled — validating the thesis that AI infrastructure buildout is a direct HDD demand driver.
Seagate's results underscore the AI-driven boom in mass-capacity HDD demand for cloud data centers, with the 48.8% operating margin highlighting the pricing power in nearline drives. Peer Western Digital (WDC) faces similar tailwinds but different product mix dynamics.
The 10-Q notes the September 2026 quarter had 13 weeks vs 14 weeks in the prior-year quarter, making the 61% YoY revenue growth even more impressive on a comparable basis. Interest expense dropped sharply to $41M from $80M, but a $44M net loss from debt transactions (vs $6M) reflects costs of the $1.262B debt redemption. Cash and equivalents fell to $1.258B from $1.704B sequentially.