Seagate Technology Holdings plc (STX): A Bull Case Theory

We came across a bullish thesis on Seagate Technology Holdings plc on Stock Analysis Compilation’s Substack. In this article, we will summarize the bulls’ thesis on STX. Seagate Technology Holdings plc’s share was trading at $151.94 as of July 2^nd. STX’s trailing and forward P/E were 21.86 and 16.37 respectively according to Yahoo Finance.

Seagate Technology Holdings (STX) stands as a dominant force in the hard disk drive (HDD) market. Over 80% of Seagate’s revenue stems from high-capacity drives sold to hyperscalers like Google, Amazon, Meta, and Microsoft, and to enterprise server and storage OEMs.

With exponential data growth driven by AI adoption, the need for high-density storage is only beginning to accelerate. Seagate is leading a pivotal transition to heat-assisted magnetic recording (HAMR), a breakthrough technology that enhances storage density and profitability.

Years ahead of competitor Western Digital, Seagate has already qualified Google for its HAMR drives and is expected to announce further customer wins soon. The initial 30TB HAMR drives are ramping, but the 40TB offering in 2026 will significantly improve unit economics by raising capacity 33% and reducing costs, expanding gross margins. While Western Digital lags with a delayed 36TB HAMR release, Seagate is poised to capitalize on industry demand. HDDs remain six times cheaper per terabyte than flash-based SSDs, and given HAMR’s advancements, HDDs will likely retain their cost advantage and data center dominance for the next decade.

The HDD industry’s duopoly structure, disciplined capacity management, and long-term supply agreements further stabilize the market and support pricing. Seagate’s capital allocation has been highly shareholder-friendly, returning over $8 billion in five years. Despite its leadership and AI-driven growth potential, Seagate trades at just 11x 2026 earnings, presenting a compelling opportunity with the potential to double or triple from current levels.

Previously, we covered a bullish thesis on Seagate Technology Holdings plc by fortitudelkw in Jannuary 2025, which highlighted the company’s leadership in cloud storage, HAMR technology, and AI-driven data growth. The company’s stock price has appreciated by approximately 40% since our coverage. This is because the thesis played out as expected. Stock Analysis Compilation shares a similar view but emphasizes upcoming margin expansion.

Seagate Technology Holdings plc is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 55 hedge fund portfolios held STX at the end of the first quarter which was 52 in the previous quarter. While we acknowledge the risk and potential of STX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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