[News] Seagate Q3 Guidance Tops Estimates, Nearline HDD Capacity Fully Booked Through 2026

While memory chipmakers have emerged as the first clear winners of the AI demand surge, the ripple effects are now spreading further down the hardware supply chain, lifting storage-focused players like Seagate and Western Digital. Reuters reported that Seagate on Tuesday forecast third-quarter revenue of $2.90 billion, with a $100 million variance, comfortably above the $2.77 billion consensus estimate compiled by LSEG.

Notably, as per the earnings transcript from Investing.com, CEO Dave Mosley noted that Seagate’s nearline capacity is fully allocated through 2026, with orders for the first half of 2027 opening in the coming months. Additionally, long-term agreements with major cloud customers provide strong visibility into demand through 2027, while discussions with multiple clients on 2028 growth plans are already underway, he added.

Mosley also pointed out that in the December quarter, Seagate saw robust, sustained demand for its high-capacity nearline drives across global cloud data centers, with strong contributions from the enterprise edge. According to Seagate, its December-quarter results came in ahead of expectations on both revenue and earnings, with the company setting new records for gross margin, operating margin, and non-GAAP EPS.

For 2Q FY2026, Seagate reported revenue of $2.83 billion, a GAAP gross margin of 41.6%, and a non-GAAP gross margin of 42.2%, while GAAP diluted EPS reached $2.60 and non-GAAP diluted EPS climbed to a record $3.11. Mosley said the results underscore strong, resilient data center demand and the accelerating ramp of HAMR-based Mozaic drives.

According to Investing.com, Mosley highlighted that 2025 was a transformational year for Seagate, both financially and operationally. The company boosted revenue by more than 25%, lifted gross margins by nearly 740 basis points, and expanded operating margins even further, highlighting the profitability leverage built into its business model, he said.

Seagate’s performance reflects a broader market trend: the massive data volumes generated by AI are placing unprecedented strain on global data center storage infrastructure. TrendForce’s latest investigations reveal that nearline HDDs, traditionally the backbone of large-scale data storage, are now facing severe supply shortages, pushing high-performance yet higher-cost SSDs into the market spotlight. In particular, shipments of high-capacity QLC SSDs could see explosive growth in 2026, according to TrendForce.

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(Photo credit: Seagate)