Seagate's Earnings Call Counteracts Market Pessimism: Revenue and Gross Profit Growth Expected in FY2027, Nearline Capacity Secured Until 2028, Clients Already Planning for 2029

On July 29, Seagate Technology strongly countered market pessimism during its earnings call. CEO Dave Mosley made a clear commitment that revenue growth for FY2027 will surpass that of FY2026, with an expected annual increase of 34%. CFO Gianluca Romano further stated, "We will achieve quarterly revenue growth and improved gross margins throughout FY2027." Currently, nearline hard drive capacity has been secured through long-term supply agreements until 2028, and clients' willingness to extend planning into 2029 continues to strengthen.

More critically, the supply-demand gap is widening—Mosley revealed that contracts are typically locked for a year, but clients are usually willing to pay above contract prices for additional capacity released after yield improvements, driving a stepwise increase in pricing each quarter. Guidance for gross margin in the September quarter is around 57%, with an operating margin of approximately 50%. Romano explicitly stated that incremental gross margins far exceed 60%, and confirmed that early HAMR customer discount pricing will be completely absent in the September quarter, further boosting average prices.

On the technical front, the HAMR roadmap is progressing fully as planned: Mosaic 3 has been certified and is in mass production with all major cloud customers, Mosaic 4 (up to 44TB/disk) is ramping up with two major CSPs globally and is making a "significant contribution" to finances, and Mosaic 5 (5TB+/disk) is expected to begin certification shipments by the end of 2027; the share of HAMR in nearline EB shipments has reached 40%, with a target to increase to 50% by year-end.

Seagate's management pointed out that the product iteration from 3TB/disk to 4TB and 5TB has made manufacturing processes more complex, with the number of heads and disks inside each unit increasing by 15% to 20% within a year, which is the core logic driving capital investment. In terms of AI demand, KV caching in intelligent applications drives massive context data storage, and physical AI will generate a large amount of unstructured video data—both are still in the "early stages." Financially, the net debt leverage ratio has dropped to 0.4 times, with an additional $1.2 billion in debt repayment expected in the September quarter, while the scale of buybacks is accelerating. After-hours stock price reversed to rise by 10%, as the market responded with real money to Seagate's endorsement of sustainable storage demand.

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