Seagate Sells Out Nearline Capacity Through 2027 as AI Drives Mozaic HAMR Demand
Seagate has fully allocated its nearline hard drive capacity through calendar 2027 due to hyperscaler contracts for Mozaic HAMR technology. The company raised Q4 FY2026 non-GAAP EPS guidance to $5.00, 26% above consensus, on record 47.0% gross margins and $953 million in quarterly free cash flow.
1. Capacity Allocation and Demand
Seagate’s nearline hard drive production is fully booked through calendar 2027 under multi-year build-to-order contracts, locking in both pricing and configurations with major hyperscalers. AI infrastructure expansion and preference for Mozaic HAMR technology have accelerated order rates beyond industry supply growth.
2. Financial Performance Outlook
Seagate raised its Q4 FY2026 non-GAAP EPS guidance to $5.00, 26% above consensus, supported by record non-GAAP gross margins of 47.0% and $953 million in free cash flow. The company has maintained operating expenses at 9.5% of revenue, enabling aggressive debt reduction and positioning for increased shareholder returns.
3. Mozaic HAMR Competitive Advantage
The second-generation Mozaic HAMR drives deliver up to 44TB per unit—over 30% more capacity than prior models—without added costs, strengthening Seagate’s edge over other HDD makers. While flash remains costly for cold storage, Seagate’s capacity and pricing stability offer compelling economics for large-scale AI and archival workloads.