Seagate Technology climbed into focus Monday as BNP Paribas kept its Outperform rating and bumped the stock's price target to $1,275. The move came with a clear message: AI is turbocharging demand for Seagate's mass storage products.
Long-term contracts tighten the grip
Analyst Karl Ackerman noted that long-term agreements (LTAs) are growing in CY28 and CY29. These LTAs offer Seagate earlier demand visibility, cutting through the noise in the normally wild storage sector.
With firm purchase orders locked 4–5 quarters out, pricing and volume are clearer than usual. That clarity helps Seagate navigate a tightening market and push for better prices.
AI is the new growth engine
Seagate's nearline drives — used by cloud providers for AI-generated data — are seeing strong demand. The firm is hitting 25% annual exabyte growth, but demand is outpacing that. This controlled supply approach may stretch the upcycle, instead of flooding the market.
Seagate's Q3 results showed the power of that strategy. Revenue hit $3.11 billion, adjusted gross margin rose to 47%, and free cash flow hit $953 million.
The next big bet: Mozaic 5
The 50-terabyte Mozaic 5 drive, coming in 2027, could tip the scales. Built with heat-assisted magnetic recording, it's expected to give Seagate a cost edge. The company is already testing its 44-terabyte Mozaic 4+ platform.
Investors are being told to watch shipment growth, pricing per terabyte, and gross margins. The LTA pipeline is key. If Seagate can keep winning those contracts without giving up pricing or profits, the new target feels solid.