JPMorgan Says Data Center Demand Will Lift Seagate Stock Even Higher. Should You Buy STX Now?
Global investment bank, JP Morgan, has stepped up and clarified its position, indicating that Seagate Technology Holdings plc (STX), the leader in crowdfunding, could be very positive as increased data center demand keeps the growth engine running strong.
The company placed Seagate on its Positive Catalyst Watch, bolstering its confidence in the company’s future direction. Samik Chatterjee and his team see Seagate holding a clear edge in the hard disk drive (HDD) space, where strong data center demand and supporting pricing trends continue to strengthen.
The company has kept its foot on the pulse of technology change and has already begun shipping next-generation Heat Assisted Magnetic Recording (HAMR) solutions to data center customers, ahead of the curve. Also, Chatterjee noted that near- and mid-term fundamentals have strengthened, as the industry has demonstrated capacity-adding behavior and leans toward profitable growth.
At the same time, he flagged the main danger that overshadowed the picture. Declining cloud capex spending on artificial intelligence (AI) infrastructure could weigh on the HDD sector’s demand growth forecast, even with a strong pipeline of investment announcements already in place.
Still, JP Morgan’s invitation to place Seagate on its Positive Catalyst Watch highlights the firm’s strong strategic foundation. As data center demand continues to rise and storage needs grow, Seagate’s push into HAMR technology strengthens its growth trajectory, leaving investors weighing whether STX stock still has room to operate.
Singapore-based Seagate builds the world’s digital backbone and delivers data storage technology and infrastructure solutions. With a market cap of approximately $116 billion, the company packs a serious punch, producing hard drives, solid state drives, and storage systems that cater to business, personal, and gaming needs.
Over the past 52 weeks, Seagate’s shares are up 623.9%, and this year has kept the ball rolling with a 99% year-to-date (YTD) profit. The past month alone has brought a quick jump of 30.28%, and the past five trading sessions have dropped as much as 9%, keeping the momentum alive and kicking.
In fact, the stock hit a 52-week high of $534.23 on April 14, when the company revealed the date of its latest earnings release.
STX stock is not cheap. The stock currently trades at 42.90 times adjusted forward earnings and 10.33 times sales, which puts it comfortably ahead of sector estimates and indicates that investors were willing to pay for a seat at the table.
At the same time, it still keeps shareholders in the loop with a fixed payout. The company paid a dividend of $2.96 per share last time and has an annual yield of 0.57%. It paid a dividend of $0.74 per share for the last period and the annual yield as of April 25.
On Jan. 28, Seagate shares fell 19.1% after the company released its Q2 2026 financial numbers that exceeded expectations on both the top and bottom lines. Revenue rose 21.5% year-over-year (YOY) to $2.83 billion and cleared the analyst estimate of $2.75 billion. Adjusted EPS rose 53.2% from the year-ago quarter to $3.11 and topped forecasts of $2.84.
The company shipped 190 exabytes in the quarter, marking a 26% YOY increase, while keeping unit volume on an even keel. The data center market pulled the lion’s share of the weight and accounted for 87% of the shipment volume, as continued demand from global cloud customers and consistent growth in the OEM business market kept the engine humming.
Non-GAAP income from operations reached $901 million and increased 67.5% YOY, while non-GAAP net income increased 62.1% to $702 million. Capital expenditures came in at $116 million, about 4% of revenue, while the company held its fiscal 2026 outlook steady at 4% to 6%.
Free cash flow increased 304.7% from the year-ago period to $607 million, marking its highest level in eight years. Also, the reserves exceeded $ 1 billion, supported by a total of 2.3 billion dollars, which gives the company enough breathing room to play the game without losing its footing.
Looking ahead, the company is targeting Q3 2026 revenue of $2.9 billion, give or take $100 million, and non-GAAP diluted EPS of $3.40, a $0.20 margin. Seagate plans to report its earnings for the third quarter of fiscal 2026 after the closing bell on Tuesday, April 28, putting the next checkpoint right there.
Still, analysts expect fiscal Q3 2026 EPS to rise 94.6% YOY to $3.25. For the full fiscal year 2026, they see earnings rising 66.8% to $12.11, and expect another 57.1% jump to $19.03 in fiscal 2027.
Erik Woodring at Morgan Stanley joined the chorus, raising his price target from $468 to $582 while maintaining an “Overweight” rating. Citigroup analyst Asia Merchant maintained her “Buy” rating and raised her price target on STX from $480 to $595.
Meanwhile, Samik Chatterjee at JP Morgan has pushed his price target on STX stock to $600 from $525, and stuck to his “Overweight” call.
Wall Street has already decided and thrown its weight behind the stock, investing it firmly in a “Strong Buy” position. Among the 25 analysts covering the stock, 19 all came in with “Strong Buy” calls, one took a “Neutral Buy” rating, and five opted for “Hold” ratings.
The stock has already surged past its $495.69 average price target. While the Street-High target of $700 hangs around a 28.2% upside from current levels.
As of the date of publication, Aanchal Sugandh did not have (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com
