Bank of America analyst Wamsi Mohan reaffirmed a Buy recommendation on Seagate, citing strong demand dynamics in data center and cloud storage. He emphasized that Seagate’s production lines are operating at full capacity, creating a tight supply environment that supports elevated pricing. With incremental shipments commanded at market rates above existing contract pricing, the firm anticipates additional upside surprises despite the stock’s strong performance over the past year.

Mohan projects that Seagate’s gross margin will expand sequentially throughout fiscal 2026, driven by high utilization in its factories and favorable unit economics on incremental volume. The tight-capacity backdrop allows Seagate to capture stronger pricing power on each new drive produced. Elevated incremental margins are expected to persist as the company brings limited additional capacity online, fueling further margin expansion into 2027.

The ramp of Seagate’s heat-assisted magnetic recording (HAMR) drives is a key growth catalyst, with the bank estimating shipments of approximately 40 exabytes of HAMR capacity during the quarter and around 1.3 million individual units. Multiple large cloud service providers have already qualified Seagate’s HAMR drives on its Mozaic platform, and further qualifications are anticipated in the first half of the next fiscal year, underpinning long-term revenue visibility.

For the upcoming fiscal second quarter, Bank of America expects robust results driven by continued strength in data center orders, alongside seasonal recovery in consumer and hybrid internal drive segments. The improved visibility into both revenue and margin trajectories reflects healthy enterprise storage requirements for artificial intelligence workloads and large-scale cloud deployments, which together form the backbone of Seagate’s near-term growth story.