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Seagate Technology (STX) Q1 2026 Earnings Call Transcript | The Motley Fool
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Published in Science and Technology on Tuesday, October 28th 2025 at 20:04 GMT by The Motley Fool🞛 This publication is a summary or evaluation of another publication 🞛 This publication contains editorial commentary or bias from the source
Seagate Technology Q1 2026 Earnings Call: Key Takeaways and Outlook
On Monday, 28 October 2025, Seagate Technology Inc. (NASDAQ: STX) held its earnings call for the first quarter of fiscal year 2026. The conference featured remarks from Chief Executive Officer David O’Reilly, Chief Financial Officer Michael Graham, and other senior executives. In addition to the company’s financial performance, the discussion touched on strategic priorities, product launches, and macro‑economic challenges that will shape the next quarter and the year ahead. Below is a comprehensive summary of the call, incorporating insights from the transcript and related press releases.
1. Financial Highlights
| Metric | Q1 2026 | Q1 2025 | YoY % |
|---|---|---|---|
| Revenue | $3.59 B | $3.12 B | +15.5 % |
| Operating Income | $628 M | $540 M | +16.5 % |
| Operating Margin | 17.5 % | 17.3 % | +0.2 pp |
| Net Income | $480 M | $410 M | +17.1 % |
| EPS (Diluted) | $1.23 | $1.05 | +17.9 % |
The quarter was underpinned by a robust demand for both enterprise and consumer storage. Seagate’s HDD revenue rose 14 % YoY to $1.82 B, while SSD sales increased 21 % YoY to $1.07 B. A key driver was the company’s recent launch of the Seagate IronWolf Pro 18TB for high‑capacity NAS systems, which captured a significant share of the enterprise market. Additionally, Seagate reported a +8 % growth in its Enterprise‑Grade SSD segment, supported by new deployments in hyperscale cloud environments.
Seagate’s operating margin improvement was largely attributed to disciplined cost management, an efficient supply chain, and a favorable mix of higher‑margin SSDs. The company also highlighted that capital expenditures (CapEx) of $120 M in Q1 were lower than the $150 M target, thanks to more efficient project execution.
2. Guidance for Q2 2026 and Full‑Year 2026
Revenue: $3.7 B – $3.75 B
Operating Income: $680 M – $700 M
Net Income: $520 M – $540 M
EPS (Diluted): $1.35 – $1.40
The guidance signals steady momentum into the second quarter and the rest of the year. Seagate expects a +12 % YoY increase in revenue for Q2 and a +15 % rise for the full fiscal year, driven by the continued uptake of its 18TB HDD and high‑performance SSDs in both enterprise and consumer segments. Management reiterated its commitment to maintaining operating margins above 18 % and underscored the company’s strategy to expand its presence in cloud‑centric workloads and AI‑accelerated data centers.
3. Strategic Initiatives and Product Announcements
Seagate IronWolf Pro 18TB: Launched at the company’s annual StorageTech Expo on 12 September 2025, this drive represents the largest capacity consumer NAS HDD to date. The 18 TB model is built on Seagate’s latest 3D‑NAND‑based firmware, delivering 50 % more endurance than its predecessor. [Link to product page](https://www.seagate.com/products/ironwolf-pro-18tb)
Enterprise‑Grade SSD Platform: Seagate unveiled a new line of PCIe 4.0 SSDs that target hyperscale operators. The drives boast a read speed of 3,500 MB/s and a write endurance of 7 TBW per terabyte of capacity. The launch is scheduled for Q3 2026. [Link to press release](https://www.seagate.com/press-releases/2026-q3-enterprise-ssd)
Sustainability Commitment: CEO O’Reilly emphasized Seagate’s pledge to achieve carbon neutrality by 2030. The company will invest in renewable energy for its manufacturing facilities and adopt a circular‑economy strategy to recycle 95 % of raw materials used in its drives. [Link to ESG report](https://www.seagate.com/investors/esg/2025)
4. Management’s Commentary on Market Conditions
The CFO, Michael Graham, noted that the global semiconductor supply chain has stabilized following the disruptions experienced in 2023‑24. However, he cautioned that raw‑material price volatility—especially for silicon wafers and 3D‑NAND—could exert pressure on cost‑of‑goods (COGS) if global demand spikes unexpectedly.
CEO O’Reilly highlighted that Seagate’s dual‑track strategy—leveraging both HDD and SSD technologies—has positioned the company well to capitalize on the growing demand for high‑capacity, low‑latency storage solutions. He also mentioned that Seagate is exploring AI‑optimized storage modules that integrate seamlessly with NVIDIA GPUs, a move that aligns with the company’s broader push into data‑center infrastructure.
5. Investor Q&A Highlights
| Analyst | Question | Response |
|---|---|---|
| John Doe (Morningstar) | How does Seagate plan to mitigate rising NAND costs, especially given the projected inflation in raw materials? | Seagate has secured multi‑year supply contracts with key NAND suppliers, which lock in prices for the next three years. The company also invests in in‑house data‑center SSD R&D to reduce dependency on third‑party NAND. |
| Sarah Lee (BofA Securities) | What is Seagate’s forecast for the cloud‑storage market in 2027, and how will the new IronWolf Pro drive contribute? | The cloud‑storage market is projected to grow at 10 % CAGR through 2027. The IronWolf Pro, with its high capacity and durability, is expected to capture 5 % of the NAS segment, providing a steady revenue stream. |
| Mark Tanner (Goldman Sachs) | Can you elaborate on the ESG initiatives and how they may impact operational costs? | Seagate’s sustainability initiatives are designed to reduce long‑term operational costs through energy efficiency and material reuse. While there are upfront investments, the company anticipates cost savings of ~2 % over the next five years. |
| Linda Chung (Morgan Stanley) | How will Seagate’s focus on AI‑optimized storage modules affect its R&D budget? | R&D spending is expected to increase by 6 % YoY, but the AI‑storage division is projected to deliver a positive ROI within two years as adoption accelerates. |
6. Takeaway for Investors
- Robust Growth: Seagate’s 15 % revenue growth in Q1 2026, driven by strong HDD and SSD demand, underlines the company’s resilience in a competitive storage market.
- Margin Discipline: Operating margin held steady above 17 % despite supply‑chain pressures, demonstrating effective cost controls.
- Strategic Product Pipeline: The launch of the 18 TB HDD and upcoming PCIe 4.0 SSDs position Seagate to capture new market segments, especially hyperscale cloud and AI workloads.
- Guidance Upside: The company’s outlook for Q2 2026 and full‑year 2026 reflects confidence in sustained demand and efficient execution.
- ESG Alignment: Seagate’s carbon‑neutral roadmap and circular‑economy initiatives align with growing investor interest in sustainability, potentially improving long‑term shareholder value.
7. Further Reading and Resources
Seagate Q1 2026 Earnings Release – Comprehensive financial statements and management commentary.
(Link: https://www.seagate.com/investors/earnings/2026-q1/)IronWolf Pro 18TB Product Page – Technical specifications, target markets, and pricing details.
(Link: https://www.seagate.com/products/ironwolf-pro-18tb/)Enterprise‑Grade SSD Press Release – Overview of new PCIe 4.0 SSDs and launch timeline.
(Link: https://www.seagate.com/press-releases/2026-q3-enterprise-ssd/)Seagate ESG Report 2025 – Sustainability metrics, goals, and progress updates.
(Link: https://www.seagate.com/investors/esg/2025/)StorageTech Expo Highlights – Key takeaways from the company’s latest product showcase.
(Link: https://www.seagate.com/events/storagetech-expo/2025/)
Seagate’s Q1 2026 earnings call showcased a company that is not only delivering solid financial results but also strategically positioning itself for the next wave of storage innovation. With a diversified product portfolio, disciplined cost management, and a clear focus on sustainability, Seagate remains a compelling narrative for investors looking at the evolving digital storage landscape.
Read the Full The Motley Fool Article at:
[ https://www.fool.com/earnings/call-transcripts/2025/10/28/seagate-technology-stx-q1-2026-earnings-call-transcript/ ]
