Key Points
Seagate (Nasdaq: STX) reports fiscal first-quarter results Tuesday, October 27, after the close. It guided to $4.1 billion in revenue (±$100 million) and $7.30 a share (±$0.20); Wall Street expects about $4.14 billion and $7.41.
Rival Western Digital just beat every number: revenue up 55% to $4.38 billion, EPS of $4.64 vs. about $4.08 expected, and next-quarter guidance of $5.0–5.2 billion vs. $4.57 billion expected. The stock still fell.
Seagate closed at $642.14 on Thursday, October 22, down 7.86% — roughly 44% below its June high of $1,145.
Options are pricing a move of about 6.6% in either direction after the report.
Western Digital just showed Seagate investors exactly what they're up against.
On Thursday night, Seagate's biggest rival posted one of the best quarters in its history. Revenue jumped 55%. Gross margin hit 58.1%. Earnings beat by more than 50 cents a share. Then management guided next quarter's revenue roughly $500 million above Wall Street's estimate and raised the dividend 17%.
The stock fell anyway. Western Digital had already dropped 6.4% during Thursday's AI selloff, then slid about 5% more after hours.
Seagate got hit in the same session, falling 7.86% to close at $642.14. That leaves the stock about 44% below its June 17 high of $1,145 — even though nothing about demand for its hard drives appears to have changed.
On Tuesday night, it's Seagate's turn.
What Western Digital Just Told Us
For the quarter ended October 2, Western Digital reported:
Revenue of $4.38 billion, up 55% year over year, versus about $4.14 billion expected.
A non-GAAP gross margin of 58.1% and an operating margin of 49.1%.
Non-GAAP earnings of $4.64 a share, up 161%, versus about $4.08 expected.
Free cash flow of $1.38 billion.
Then came the guidance. Western Digital expects revenue of $5.0 billion to $5.2 billion next quarter — up 69% at the midpoint — with gross margin rising to 60%–61%. Analysts had been looking for $4.57 billion.
CFO Kris Sennesael credited "robust exabyte growth and improved pricing." In plain English: AI companies are storing more data than ever, and they're paying more per drive to get it.
As we wrote ahead of that report, Western Digital is effectively sold out of hard drives. Thursday's numbers backed that up. The two companies dominate the same market and sell to the same handful of cloud giants. Pricing power at one usually means pricing power at the other.
Seagate's Own Setup
Seagate has already told Wall Street to expect a big quarter.
Back in July, it guided to $4.1 billion in revenue, plus or minus $100 million. That's about 56% growth at the midpoint. It also guided to $7.30 a share, plus or minus 20 cents. Both numbers were far above the $3.75 billion and $5.80 analysts expected at the time.
That followed a record fiscal 2026. Seagate grew revenue 34% to $12.2 billion and generated a record $3.1 billion in free cash flow. In the June quarter alone, non-GAAP gross margin reached 52.7%.
The technology story matters, too. Seagate's HAMR drives — which pack far more data onto every platter — made up about 40% of its nearline exabyte shipment run rate exiting the fiscal year. Its Mozaic 4 platform, which supports up to 44 terabytes per drive, is ramping with the two largest cloud providers. More data per drive means more revenue without building new factories.
Wall Street now expects about $4.14 billion in revenue and $7.41 a share — near the top of the guidance range. Wedbush expects demand to keep running well ahead of supply.
So Why Has the Stock Been Cut Nearly in Half?
Three things broke the momentum.
First, Toshiba. On October 2, Nikkei reported that Toshiba plans to spend about ¥60 billion (roughly $400 million) to double its hard-drive production capacity by fiscal 2027. Toshiba holds just over 10% of the market by capacity, and it is targeting 30%. Seagate fell about 11% in early trading that morning.
Second, insider selling. CEO Dave Mosley sold roughly $17.4 million of stock on October 1, at around $915 a share — the day before the Toshiba report.
Third, the AI trade itself. Investors have been pulling money out of anything tied to data-center spending. The selling hit after Meta's spending disclosures and swept through memory and storage names, as we saw in Meta's $145 billion AI budget story. Seagate fell five straight sessions into October 16, then dropped again Thursday.
None of those three things showed up in Western Digital's numbers. Toshiba's new capacity isn't due until its fiscal 2027. The industry is sold out today.
Even after the drawdown, Seagate remains more than double where it started the year. That cuts both ways: there's still plenty of profit to take, but the earnings underneath the stock keep climbing.
What to Watch Tuesday Night
Three things will decide the reaction:
December-quarter guidance. Western Digital guided 69% growth. If Seagate's outlook implies anything similar, the Toshiba fear looks overdone.
Gross margin. Western Digital is heading toward 60%. Seagate was at 52.7% in June. The gap tells you how much pricing power Seagate is capturing.
Commentary on supply. Investors want to hear whether hyperscalers are signing longer contracts — and whether Toshiba's expansion changes those conversations.
Western Digital proved that a blowout isn't enough on its own right now. Seagate will need the guidance to do the talking.
What Lands Next
Monday, October 26: Verizon before the open; Cadence Design and Nucor after the close.
Tuesday, October 27: Seagate and NXP Semiconductors after the close; September durable goods orders.
Wednesday, October 28: The Fed's rate decision at 2:00 p.m. ET, with futures pricing roughly a 91% chance of a hold at 3.75%–4.00%. Microsoft and Alphabet report after the close.
Thursday, October 29: Third-quarter GDP and September personal income and spending; Amazon and Intel after the close.
Monday, November 2: Apple and onsemi.
This article is for informational and educational purposes only and does not constitute investment advice or a recommendation to buy or sell any security.
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