Seagate Earnings Today: Record Profit as AI Hard Drive Demand Surges

Seagate Technology posted its most profitable quarter on record on October 28, 2026, reporting fiscal first-quarter 2027 revenue of $4.2 billion and non-GAAP diluted earnings of $7.68 a share, as hyperscale and AI data centers keep buying nearline hard drives faster than the industry can make them. The results, filed with the SEC alongside Western Digital's own blowout quarter from a week earlier, confirm that the storage squeeze hitting RAM and NAND flash this year has an equally severe hard-disk-drive (HDD) counterpart.

Seagate's headline numbers

According to the earnings release Seagate filed with the SEC, fiscal first-quarter 2027 revenue came in at $4,233 million, more than 60% higher than the $2,629 million it reported in the same quarter a year earlier. GAAP gross margin was 57.3%, and non-GAAP gross margin was 57.8%. GAAP operating income was $2,064 million and non-GAAP operating income was $2,147 million. GAAP net income was $1,761 million, with GAAP diluted earnings per share of $7.59; on a non-GAAP basis, net income was $1,781 million and diluted EPS was $7.68.

Cash flow from operations was $1.690 billion, and free cash flow — operating cash flow minus capital spending — hit $1.479 billion, which the company says is its highest ever for a September quarter. Seagate used that cash to retire roughly $1.2 billion of debt principal during the quarter, then paid down another $750 million after the quarter closed, pushing gross debt down to $1.6 billion. It also returned $568 million to shareholders: $168 million in dividends and $400 million in share buybacks.

CEO Dave Mosley framed the quarter as validation of a multi-year storage upcycle, not a one-off: "Seagate delivered another quarter of record profitability and our highest ever free cash flow in the September quarter, demonstrating the earnings power of our business amid a strengthening demand environment. Data creation, retention and reuse continue to compound storage demand with long term customer demand visibility reinforcing our view of a multi-year growth phase." He added that the company's HAMR-based technology roadmap lets it "address growing exabyte demand through areal density gains while maintaining supply discipline," combined with a "value-based pricing strategy and strengthened balance sheet."

Why hard drives are having their own AI moment

Most of 2026's storage-price coverage has centered on DRAM and NAND flash, where contract prices have been climbing for months as AI accelerator and server memory demand eats into supply (Pandromeda has covered that RAM and SSD price trend repeatedly this quarter). Seagate's and Western Digital's results show the same dynamic playing out in spinning hard drives, which remain the cheapest way to store the enormous, mostly "cold" datasets that AI training and inference pipelines generate, retain and reuse.

Unlike DRAM and NAND, HDD manufacturing capacity has barely changed in years — there are effectively three volume hard-drive makers left (Seagate, Western Digital and Toshiba), and none of them has announced new fabrication capacity. Instead, both Seagate and Western Digital have been pushing areal density higher: Seagate's Mozaic HAMR (heat-assisted magnetic recording) platform and Western Digital's own technology roadmap let each physical platter hold more data without adding factories. Seagate's enterprise Exos drives, for instance, are now rated for up to 32TB per drive, which the company's own product page markets explicitly as built to "flex with fast-expanding AI, cloud and enterprise workloads." That combination — flat supply, platter-density gains instead of new plants, and relentless hyperscaler demand for nearline capacity — is why gross margins at both companies expanded sharply even as unit shipment growth has been more modest than revenue growth.

Seagate vs. Western Digital: two blowout quarters, one driver

Seagate's results landed six days after Western Digital's own fiscal Q1 2027 report, and the two filings tell a near-identical story from the two companies that, with Toshiba, control almost all of the world's hard-drive supply.

Western Digital CEO Irving Tan described a nearly identical setup in his own earnings statement, filed with the SEC on October 22: "Fiscal 2027 is off to a strong start, with results exceeding expectations, driven by robust customer demand and disciplined execution." He said quarterly revenue grew 55% year over year and non-GAAP gross and operating margins expanded to 58.1% and 49.1% respectively, "resulting in a 161% year-over-year increase in non-GAAP EPS," and pointed to the company "executing well through our technology transitions to meet the growing demand for storage." Western Digital also raised its quarterly dividend by 17%, to $0.175 per share — a steeper increase than Seagate's roughly 3% bump, though off a much smaller base.

Both companies guided for sequential growth again next quarter: Seagate expects fiscal Q2 2027 revenue of $4.8 billion (plus or minus $100 million) and non-GAAP diluted EPS of $9.20 (plus or minus $0.20), while Western Digital guided to $5.1 billion in revenue and non-GAAP EPS of $5.80. Both figures would mark yet another sequential jump from the quarter just reported, and neither company flagged any near-term loosening of supply.

How this quarter compares with what Seagate itself predicted

Seagate's own guidance, issued three months ago alongside its fiscal Q4/full-year 2026 results, had called for fiscal Q1 2027 revenue of $4.1 billion (plus or minus $100 million) and non-GAAP diluted EPS of $7.30 (plus or minus $0.20). The actual reported revenue of $4.233 billion and non-GAAP EPS of $7.68 landed above the top end of that range on the EPS line and comfortably inside the upper half on revenue — a sign that even Seagate's own finance team, which has lived through this upcycle for several quarters now, was still underestimating how tight hard-drive supply would stay heading into the holiday-adjacent quarter.

Debt paydown, dividends and buybacks

Seagate entered its AI-driven storage upcycle carrying a heavier debt load than Western Digital, a legacy of years when hard-drive demand was shrinking and the company borrowed to fund dividends and buybacks through the downturn. This quarter's $1.479 billion of free cash flow let it retire about $1.2 billion of debt principal during the quarter itself, plus another $750 million immediately after the quarter closed, taking gross debt down to roughly $1.6 billion — a sharp reduction that the company's earnings release ties directly to this quarter's cash generation. At the same time, it still found room to raise its quarterly dividend to $0.76 per share (payable January 7, 2027, to holders of record as of December 23, 2026) and buy back $400 million of stock. Western Digital, carrying less legacy debt, put more of its own windfall toward a steeper 17% dividend increase instead.

What it means if you're buying storage

None of this is great news if you're shopping for storage rather than Seagate or Western Digital stock. The same supply discipline and "value-based pricing" that Mosley cited as a driver of Seagate's margins has already pushed up prices for external drives, NAS-oriented drives and enterprise-class SSDs this year, alongside the DRAM and NAND increases Pandromeda has tracked separately, including the ongoing DRAM price-fixing litigation against the three largest memory makers. With both major hard-drive makers now explicitly guiding to higher revenue and steady-to-higher margins next quarter, and neither signaling new manufacturing capacity on the way, consumer and small-business buyers shouldn't expect nearline-driven HDD pricing pressure to ease before 2027 at the earliest. The squeeze is concentrated at the enterprise/nearline end of the market — the 20TB-plus drives hyperscalers buy by the rack — but component and manufacturing costs for high-capacity drives tend to flow through to consumer-facing external drives and NAS enclosures over time as well, the same way rising DRAM contract prices have pushed up finished-PC and laptop pricing this year. If you're deciding whether to buy storage now, Pandromeda's SSD buying guide covers the flash side of that same calculus, even though SSDs and HDDs are made by largely different supply chains.

The technology behind the capacity gains

Seagate's capacity gains are coming from its Mozaic platform and HAMR recording technology rather than new factories. HAMR uses a laser to briefly heat a tiny spot on the platter before writing to it, which allows smaller, more stable magnetic grains and therefore more data per square inch than conventional perpendicular magnetic recording. Seagate's enterprise Exos line, built on that platform, is now rated up to 32TB per drive, and the company markets it specifically for "AI, big data analytics and high-capacity storage environments," according to its own product page. That density gain is effectively how Seagate and Western Digital can keep growing exabyte shipments — the actual measure hyperscale customers care about — without adding fabrication lines, which is also why neither company's earnings call signaled any plan to build new capacity even as demand keeps outrunning supply. Seagate's own Exos enterprise drive page and Western Digital's newsroom both now market their nearline lines primarily around AI and cloud workloads rather than traditional enterprise storage, underlining how central that customer base has become to both businesses.

A hard-drive market down to three makers

Part of why Seagate and Western Digital can both post record margins in the same quarter is that there are only three companies left making hard drives at any real volume: Seagate, Western Digital and Toshiba. Seagate traces its roots to 1979 and, like Western Digital, has absorbed most of its former rivals — including Samsung's and Hitachi's old hard-drive businesses — over the past two decades, according to Wikipedia's history of the company. Toshiba remains a distant third, and industry trade press has reported that it is investing to grow its share of the nearline market after years on the sidelines of the AI-driven boom, though exact market-share figures vary by source and research firm.

With no fourth competitor waiting to undercut prices and no new HDD fabrication plants under construction anywhere, the two leaders have more room than usual to prioritize profitability over volume growth — which is exactly what both companies' guidance for the December quarter implies they intend to keep doing.

What's next

Seagate's fiscal Q2 2027 (the December quarter) will be the next checkpoint, with the company guiding to $4.8 billion in revenue and $9.20 in non-GAAP EPS — numbers that, if hit, would again be a new company record. Toshiba, the third major HDD maker and a much smaller public reporter, has not yet published comparable fiscal results for the same period; its figures would complete the picture of how tight nearline supply really is across the whole industry. Investors and storage buyers alike will also be watching whether either Seagate or Western Digital eventually breaks with "supply discipline" and announces new manufacturing capacity — something neither has done despite now several consecutive quarters of record-breaking demand. Both companies' quarterly filings and investor presentations, including Seagate's own investor relations site, are the places to watch for that next disclosure.

Written byMara Lindqvist

Mara Lindqvist edits the hardware desk. She covers graphics cards, processors, memory and storage, the foundries and chip designers behind them, and what the numbers on a spec sheet mean for people choosing a PC. Specifications in her stories come from manufacturer spec pages and datasheets.

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