Seagate (STX) Stock Up 350% — J.P. Morgan Says There’s Still More to Come

TLDR

• J.P. Morgan initiated Seagate (STX) with an Overweight rating and a $525 price target, implying ~39% upside from Friday’s close.
• The bank set its target using a 22x multiple on its 2027 EPS estimate of $23.45, calling the valuation conservative relative to AI-levered peers.
• J.P. Morgan forecasts STX gross margins reaching 50% by end of 2027, up from a historical 25–30% range.
• The bank projects a 25% revenue CAGR and 50%+ operating earnings CAGR driven by surging AI data center storage demand.
• Seagate’s HAMR technology — the Mozaic 4 platform at ~40TB per drive — has been qualified with a second customer, adding a further growth catalyst.

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Seagate Technology (STX) has been one of the standout performers of the past year, surging around 350% since early 2025 — compared to an 11% gain for the S&P 500 over the same stretch. But according to J.P. Morgan, the run may not be over yet.

Seagate Technology Holdings plc, STX

On Monday, analyst Samik Chatterjee initiated coverage of STX with an Overweight rating and a year-end price target of $525. That’s built on a 22x multiple applied to J.P. Morgan’s 2027 EPS estimate of $23.45, implying roughly 39% upside from where the stock closed on Friday.

The price target means Seagate wouldn’t just recover to recent highs around $440 — it would push well beyond them.

The bank’s bull case rests on two main drivers: surging AI infrastructure spending from hyperscalers and a pricing environment that analysts believe is structurally better than anything the HDD industry has seen in years.

Chatterjee projects storage exabyte growth in the mid-20% range annually — up from a low-teens historical rate — as AI workloads push data center storage demand sharply higher.

STX has long traded at compressed valuations given how cyclical the storage industry can be. Periods of tight supply have typically been followed by oversupply and margin pressure. The historical price-to-earnings multiple sat around 10x over the prior decade before the AI infrastructure buildout took hold.

A Disciplined Duopoly

Chatterjee argues that dynamic is changing. Seagate and Western Digital together control roughly 80–90% of HDD supply, and both have publicly committed to growing capacity through higher-density drives rather than simply adding more units.

“The HDD market remains an oligopoly with two large players in Seagate and Western Digital, and both have committed to remaining disciplined in relation to the addition of unit capacity,” Chatterjee wrote.

That discipline, the bank says, supports pricing and should underpin margin expansion for longer than prior cycles. J.P. Morgan forecasts Seagate’s gross margins reaching 50% by end of 2027, up from a historical range of 25–30%. Combined with revenue growth, that could drive more than 50% operating earnings growth in the medium term.

J.P. Morgan’s 22x multiple is conservative relative to the roughly 25x average for AI-levered suppliers, leaving room for further re-rating if cloud capital spending trends remain strong or pricing surprises to the upside.

HAMR Technology Adds Another Layer

One additional catalyst is Seagate’s heat-assisted magnetic recording technology, known as HAMR. The company’s Mozaic 4 platform can store around 40 terabytes per drive and has now been qualified with a second customer.

J.P. Morgan expects the faster-than-expected adoption of HAMR to support further upside to exabyte growth targets.

The bank does flag risks: a slowdown in cloud capital spending, capacity constraints, and a faster-than-expected shift by customers toward flash-based storage as NAND prices ease. Western Digital (WDC) was also lower Monday, down 3.51%.

Chatterjee noted that J.P. Morgan’s financial forecasts already imply upside to 2027 consensus estimates, with further room if pricing or cloud spending comes in stronger than assumed.

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