On January 17, Susquehanna analyst Marley Kayden upgraded Seagate Technology (STX) from Neutral to Positive, citing the company’s growing exposure to AI-driven storage solutions. The firm raised its 12-month price target on STX from $70 to $88, reflecting a 26% upside from late‐December levels. Kayden highlighted that Seagate’s AI-optimized hard disk drives (HDDs) now represent 35% of total backlog, up from 20% three months earlier, driven by hyperscale data center contracts with Amazon Web Services and Microsoft Azure.

Seagate has been a standout beneficiary of the broader memory chip rally, which has seen DRAM prices climb 45–50% and NAND prices jump 33–38% in Q4 2025. While these figures largely reflect semiconductor giants, Kayden noted that Seagate’s specialized HDDs and archival storage systems captured a disproportionate share of the AI infrastructure buildout. The company reported that new AI‐related orders accounted for $1.2 billion of its $3.4 billion Q4 revenue, up from $650 million in the prior quarter.

Seagate’s fully booked order book now extends into Q3 2026, supporting a consensus revenue growth forecast of 18% year-over-year. Gross margins are projected to expand to 29% in fiscal 2026 from 24% in fiscal 2025, driven by higher average selling prices on AI HDDs and improved manufacturing yields. Management has reiterated its commitment to returning at least 60% of free cash flow to shareholders via dividends and share repurchases, estimating roughly $1.5 billion in buybacks for the full year.