BofA Raises Seagate Target 22.6% to $400 on Q2 Data Center Strength
Bank of America reiterated its Buy rating on Seagate Technology and raised the price target from $320 to $400, implying 22.6% upside. The note attributes expected fiscal Q2 strength to robust data center demand and seasonal consumer and VIA segment improvements, with margin expansion ahead.
1. Bank of America Reaffirms Buy Rating and $400 Price Target for Seagate Technology
In its latest research note, Bank of America analyst Wamsi Mohan maintained a Buy rating on Seagate Technology and lifted the firm’s price target from $320 to $400, reflecting a 22.6% upside from current levels. Mohan cited growing confidence in Seagate’s revenue trajectory and expanding profit margins, driven by persistent demand for high-capacity storage solutions in data center environments. The revised target incorporates stronger visibility into multi-year customer commitments and an increasingly tight supply environment that underpins pricing momentum.
2. Robust Q2 Performance Driven by Data Center Demand and Seasonal Consumer Recovery
Seagate is poised to deliver impressive fiscal second-quarter results, with Bank of America forecasting top-line growth led by data center bookings and a seasonal uptick in its consumer and Video, Image & Applications (VIA) segments. The bank expects revenue growth in the mid‐teens percentage range year‐over‐year, supported by continued absorption of new capacity by cloud service providers. Inventory destocking in legacy markets has largely subsided, allowing Seagate to redeploy manufacturing throughput toward higher-margin, storage-intensive workloads.
3. Tight Capacity Fuels Pricing Power and Margin Expansion
Operating at near maximum utilization, Seagate is capitalizing on a scarcity-driven environment to command premium pricing for incremental volumes. Bank of America projects gross margins to expand sequentially in each quarter of fiscal 2026, with incremental margins remaining above corporate averages. Any new capacity brought online can be sold at spot market rates exceeding contracted pricing, creating a pathway for upside surprises in both revenue and profit metrics even after the stock’s recent rally.
4. HAMR Technology Ramp and Long-Term Cloud Customer Wins
Seagate’s heat‐assisted magnetic recording (HAMR) technology is gaining traction, with the bank estimating shipments of approximately 40 exabytes of HAMR drives—around 1.3 million units—during the quarter. Multiple global cloud service providers have already qualified the company’s Mozaic platform, and further qualifications are expected in the first half of fiscal 2026. These developments, combined with long‐term purchase agreements extending through 2027, underpin Bank of America’s view that Seagate is well positioned to capture a disproportionate share of incremental storage demand driven by artificial intelligence and hyperscale computing deployments.