Tech Explained: Rising AI Storage Demand And Note Exchange Might Change The Case For Investing In Seagate (STX) in Simple Terms

• In recent weeks, Seagate Technology Holdings highlighted rising demand for its high-capacity drives tied to AI and cloud workloads, projected third-quarter revenue above prior consensus, and moved to exchange US$600 million of 3.50% exchangeable senior notes due 2028 for cash and ordinary shares, with the exchanged notes to be retired.
• Together with ongoing qualification of its HAMR-based Mozaic products at major cloud customers, these actions underline how Seagate is aligning its balance sheet and product roadmap with long-term AI infrastructure and enterprise storage needs.
• With that backdrop, we’ll explore how stronger AI-driven storage demand and Seagate’s balance sheet moves may influence its existing investment narrative.

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Seagate Technology Holdings Investment Narrative Recap

To own Seagate today, you need to believe that AI and cloud workloads will keep requiring ever larger, cost-efficient storage, and that Seagate’s HAMR-based Mozaic roadmap can serve that demand while managing high debt and competition from SSDs. The latest update on stronger AI-related demand and above-consensus revenue guidance supports the near term demand catalyst, while the sizeable exchange of 3.50% notes slightly reduces balance sheet risk but does not remove it.

The recent agreement to exchange US$600,000,000 of Seagate HDD Cayman’s 3.50% exchangeable senior notes for cash and shares, with those notes to be retired, is particularly relevant here. It directly touches one of the key current concerns for shareholders: how Seagate handles its leverage as it spends on next generation drives and leans into AI infrastructure opportunities.

Yet against that constructive backdrop, investors also need to weigh how rising SSD adoption and other energy efficient storage trends could pressure Seagate’s HDD centric model and…

Read the full narrative on Seagate Technology Holdings (it’s free!)

Seagate Technology Holdings’ narrative projects $12.0 billion revenue and $2.5 billion earnings by 2028. This requires 9.5% yearly revenue growth and a $1.0 billion earnings increase from $1.5 billion today.

Uncover how Seagate Technology Holdings’ forecasts yield a $297.09 fair value, a 30% downside to its current price.

Exploring Other Perspectives

Some of the lowest ranked analysts saw a very different picture, expecting only about 3.4 percent annual revenue growth to roughly US$10.1 billion and earnings of about US$2.4 billion by 2028, which is far more cautious than the consensus. As you weigh the fresh AI driven demand news and balance sheet moves, it is worth comparing that more pessimistic view with your own expectations for Seagate’s long term HDD exposure and competitive position.

Explore 4 other fair value estimates on Seagate Technology Holdings – why the stock might be worth 30% less than the current price!

Build Your Own Seagate Technology Holdings Narrative

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This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

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