Seagate Posts Record $7.68 EPS as Data Center Sales Jump 63%

Seagate Technology said on 27 October 2026 that its Data Center revenue rose 63% year over year to $3.4 billion in its fiscal first quarter, which ended on 2 October. Total revenue was $4,233 million, against $2,629 million a year earlier, and non-GAAP diluted earnings per share were a record $7.68, against $2.61.

The company also said the vast majority of its Data Center nearline supply is allocated through calendar 2028, with some cloud supply agreements extending through 2030. It guided December-quarter revenue to $4.8 billion, plus or minus $100 million.

Short explainer · Seagate fiscal Q1 2027

A vertical news Short narrated from the published text of this piece and related FourWeekMBA pieces.

Business Pill · The Memory Wall

An evergreen Business Engineer explainer on the memory wall in AI hardware. It explains the general idea and does not discuss Seagate.

Where the Drives Went

Seagate says Data Center represented 90% of its exabyte shipments in the quarter, at 198 exabytes, up about 24% year over year. Its supplemental financial information puts total hard-drive capacity shipped at 220 exabytes, against 182 a year earlier.

Seagate defines Data Center as nearline products sold into cloud, enterprise, VIA customers and systems; all other products are Edge IoT. Data Center revenue was $3,449 million, or 81% of revenue, and Edge IoT revenue was $784 million, up 52%.

The company says cloud remains the primary demand driver, with 12 consecutive quarters of revenue growth. It says Enterprise/OEM revenue grew for the sixth consecutive quarter, increasing double digits both sequentially and year over year.

What Was Posted on X

Nicholas Mugalli (@RealNickMugalli) posted a preview at 19:55 UTC on 27 October, before the report. The post says Seagate guided to $4.1bn of sales and $7.30 of EPS, calls a 52.7% gross margin a record, argues that about 90% of data in the big clouds sits on hard drives, and sets a price target of $1,050 with an Overweight rating. Those views and the target are the poster’s; this piece compares the guide in the post with Seagate’s reported figures.

Supply Sold Ahead

In its markets and technology highlights, Seagate says the vast majority of Data Center nearline supply is allocated through CY28, with some cloud supply agreements extending through CY30.

“Data creation, retention and reuse continue to compound storage demand with long term customer demand visibility reinforcing our view of a multi-year growth phase,” said Dave Mosley, Seagate’s chair and chief executive officer.

Seagate says it is executing a technology roadmap anchored by HAMR technology to address exabyte growth by increasing capacity per drive rather than increasing drive unit production. It says Mozaic 4 is ramping with two leading cloud service providers, and that Mozaic 5 qualification shipments are on track to begin toward the end of CY27.

Margins and Cash

GAAP gross margin was 57.3% and non-GAAP gross margin was 57.8%, against 40.1% a year earlier on a non-GAAP basis. Non-GAAP operating margin was 50.7%. GAAP diluted EPS was $7.59 and GAAP net income was $1,761 million.

Seagate generated $1.7 billion in cash flow from operations and $1.5 billion in free cash flow. It retired approximately $1.2 billion in principal debt in the quarter, lowering gross debt to $2.4 billion, and says it retired an additional $750 million after the quarter ended, bringing gross debt to $1.6 billion.

The company returned $568 million to shareholders through dividends and share repurchases, and its board declared a quarterly cash dividend of $0.76 per share, up approximately 3%, payable on 7 January 2027.

The Guide and the Share Price

For its fiscal second quarter, Seagate guided revenue of $4.8 billion, plus or minus $100 million, and non-GAAP diluted EPS of $9.20, plus or minus $0.20, with non-GAAP operating margin toward the mid 50% range of revenue.

Shares sank 6% in after-hours trading despite earnings and revenue above estimates, per LSEG, CNBC reported; CNBC added that the guidance for the current quarter was also better than expected.

Connecting the Coverage

On 22 October we reported that Western Digital revenue jumps 55% to $4.4B on cloud storage, the other large hard-drive maker reporting the same cloud demand. On the memory side, today we reported that Apple, Samsung reportedly cut orders as memory costs soar, and earlier that Alibaba, Tencent reportedly seek 10-year memory deals.

What’s new: Seagate says the vast majority of its Data Center nearline supply is allocated through calendar 2028, alongside a 63% rise in Data Center revenue.

The Structural Read

As we read it, revenue rose faster than capacity shipped: Seagate says Data Center revenue rose 63% while Data Center exabytes rose about 24%, and its chief executive cites a value-based pricing strategy.

As we read it, the dated part of the report is the allocation: Seagate says the vast majority of Data Center nearline supply is allocated through CY28, with some cloud supply agreements extending through CY30.

Before the report, Nicholas Mugalli (@RealNickMugalli) wrote on X that Seagate guided to $4.1bn of sales and $7.30 of EPS; Seagate reported $4,233 million of revenue and $7.68 of non-GAAP EPS, which is our comparison.

Three Implications

FOR CLOUD BUYERS Seagate says the vast majority of Data Center nearline supply is allocated through CY28, with some cloud supply agreements extending through CY30.

FOR INVESTORS Seagate guided December-quarter revenue to $4.8 billion, plus or minus $100 million, and non-GAAP EPS to $9.20, plus or minus $0.20; shares sank 6% after hours, CNBC reported.

FOR THE DRIVE ROADMAP Seagate says Mozaic 4 is ramping with two leading cloud service providers, and that it demonstrated 8TB per disk in the lab.

The Business Engineer Lens

This story maps onto the Business Engineer framework The AI Supercycle.

The framework sets out a rule for the AI stack: “Each layer is constrained by the one below it.”

As we read it, the framework does not name storage among its nine layers; Seagate’s report shows a supplier below the compute layer putting its own date on allocation, with most Data Center nearline supply allocated through CY28. The framework was written before these results and does not discuss Seagate.

What Is Not Established

Seagate does not say what share of its Data Center demand comes from AI workloads, and its release and supplemental information do not use the word AI. It does not give prices per terabyte or name the cloud customers behind the supply agreements. We read the results release filed with the SEC and the supplemental financial information on Seagate’s investor relations site; we did not listen to the earnings webcast.

The Bottom Line

Seagate reported Data Center revenue of $3.4 billion, up 63%, a record $7.68 in non-GAAP EPS and a $4.8 billion revenue guide for the December quarter. It says most of its Data Center nearline supply is allocated through 2028.