Revenue for Q2 FY2026 was $2.83 billion, up about 22 percent year-over-year. GAAP diluted EPS was $2.60, while non-GAAP diluted EPS was $3.11. The quarter also featured record gross and operating margins, strong operating cash flow of $723 million, and free cash flow of $607 million. Seagate declared a quarterly dividend of $0.74 per share. Management highlighted continued strong demand from data center customers, the ongoing ramp of HAMR-based products, and robust storage density trends.
Note: Seagate's fiscal 2025 ended on June 27, 2025. Q2 FY'26 refers to the quarter that ended on January 2, 2026.
Seagate also provided guidance for the next quarter, with expected revenue of nearly $2.9 billion and non-GAAP EPS of approximately $3.40, implying continued growth if demand/supply conditions hold. Management emphasized strong underlying demand from cloud customers and ongoing adoption of high-capacity storage drives — a trend especially relevant as data growth and AI workloads continue to expand.
Seagate is a leading provider of data storage technology and solutions. Their principal products are hard disk drives, commonly referred to as disk drives, hard drives, or HDDs. In addition to HDDs, they produce a broad range of data storage products, including solid state drives (SSDs), solid state hybrid drives (SSHDs), storage subsystems, as well as a scalable edge-to-cloud mass data platform that includes data transfer shuttles and a storage-as-a-service cloud.
HDDs are devices that store digitally encoded data on rapidly rotating disks with magnetic surfaces. HDDs continue to be the primary medium of mass data storage due to their performance attributes, reliability, high capacities, superior quality, and cost-effectiveness. Complementing existing storage architectures, SSDs use integrated circuit assemblies as memory to store data, and most SSDs use NAND flash memory. In contrast to HDDs and SSDs, SSHDs combine the features of SSDs and HDDs in the same unit, containing a high-capacity HDD and a smaller SSD acting as a cache to improve the performance of frequently accessed data.
Seagate's HDD products are designed for mass-capacity storage and legacy markets. Mass capacity storage involves well-established use cases, such as hyperscale data centers and public clouds, as well as emerging use cases. Legacy markets include markets they continue to service but don't plan to invest in significantly. Seagate's HDD and SSD product portfolio includes Serial Advanced Technology Attachment, Serial Attached SCSI, and Non-Volatile Memory Express-based designs to support a wide variety of mass capacity and legacy applications.
The systems portfolio includes storage subsystems for enterprises, cloud service providers, scale-out storage servers, and original equipment manufacturers (EMs). Engineered for modularity, mobility, capacity, and performance, these solutions include enterprise HDDs and SSDs, enabling customers to integrate powerful, scalable storage within legacy environments or build new ecosystems from the ground up in a secure, cost-effective manner.
Seagate's Lyve portfolio provides a simple, cost-efficient, and secure way to manage massive volumes of data across the distributed enterprise. The Lyve platform includes a shuttle solution that enables enterprises to transfer massive amounts of data from endpoints to the core cloud, a storage-as-a-service cloud that provides frictionless mass capacity storage at the metro edge, a converged object storage solution enabling efficient capture and consolidation of massive data sets, and Cortx, an open-source object storage software optimized for mass capacity and data-intensive workloads.
We estimate that the enterprise and cloud storage business of Seagate, driven by robust growth in the cloud computing industry, will become the most valuable part of their business by the end of our forecast period.
Seagate’s margin improvement is being driven primarily by a mix shift toward high-capacity nearline HDDs for cloud and hyperscale customers, rather than a major push into flash. Strong demand for mass-capacity storage tied to AI and data center workloads is lifting average selling prices and improving fixed-cost leverage. At the same time, the ramp of HAMR technology is enabling higher areal density and cost per terabyte reductions, supporting both pricing power and long-term gross margin expansion. The $119 million acquisition of Intevac strengthens Seagate’s control over HAMR media manufacturing, improving yields and supply visibility. Together, disciplined industry supply, higher-capacity product mix, and vertical integration in media, position Seagate to sustain healthier margins and generate stronger cash flow in a data-driven market.
The high growth of digital content is driving the need for higher storage capacity to store, aggregate, host, distribute, manage, back up, and use digital content. The need to access rich data and content is being driven by a highly mobile and increasingly connected user base. The traditional enterprise and client compute markets will continue to demand high-capacity storage solutions and will be best served by hard disk drives, where manufacturers compete on the ability to deliver cost-effective, reliable, and energy-efficient mass storage devices. The increasing demand for HD content for media consumption and rich formats such as HD, DVD, and Blu-Ray drives the demand for high-capacity disk drive solutions in the end-user market. The need for storing data locally is counteracted by the growing presence of cloud-based storage, which eliminates the need to backup data or fear losing data. Moreover, it is universally accessible, which makes it a lucrative option. Consequently, large data centers are growing in numbers, and the need to store data locally (on embedded hard drives or external disks) is declining.
All leading laptop manufacturers are now offering laptops with a hybrid HDD-SSD primary memory and high-end, high-performance laptops with complete SSD memory. Solid-state drives are much more expensive per GB, and this is the primary reason for the slow adoption of SSD as the primary memory component. As production capacity increases and technology changes lead to a drop in SSD prices, we can expect that solid-state drives will become a standard for notebooks and netbooks.
We expect Seagate's enterprise business to be driven by businesses deploying cloud computing environments in an effort to pool resources and cut costs. Remote storage is becoming a standard for most enterprises and has even gained traction with retail customers with services like Dropbox, SkyDrive, and Google Drive.
To achieve the high performance needed with cloud computing, we can expect the hybrid SSD-HDD enterprise storage drives to become popular in the future.
The storage industry as a whole is going through a phase of consolidation, as companies are unable to keep up with the constant need to improve manufacturing efficiency, and the capital required for R&D and stay ahead of changing trends such as the shift to SSD.
Below are key drivers of Seagate's value that present opportunities for upside or downside to the current Trefis price estimate for Seagate:
