Shares of Seagate Technology PLC (NASDAQ: STX) are soaring 11.15% in pre-market trading on Wednesday following the company's impressive fiscal first quarter 2026 financial results and optimistic second-quarter outlook. The data storage giant's performance exceeded analyst expectations, driven by robust demand for high-capacity storage products, particularly in AI applications.
For the quarter ended October 3, Seagate reported revenue of $2.63 billion, up 21% year-over-year and beating the analyst consensus of $2.54 billion. The company's adjusted earnings per share came in at $2.61, significantly higher than the $2.37 expected by analysts and representing a 65% increase from the same period last year. Seagate's GAAP gross margin improved to 39.4% from 32.9% a year earlier, while its GAAP operating margin rose to 26.4% from 18.6%.
Looking ahead, Seagate provided an upbeat forecast for the second quarter, projecting revenue between $2.6 billion and $2.8 billion, and adjusted earnings per share between $2.55 and $2.95. CEO Dave Mosley attributed the strong performance to "robust customer demand for our high-capacity storage products" and highlighted the growth driven by new AI applications. Additionally, Seagate announced a 3% increase in its quarterly cash dividend to $0.74 per share, further boosting investor confidence in the company's financial health and growth prospects.
The positive results and outlook have prompted several analysts to raise their price targets for Seagate. Notably, Citi increased its target from $250 to $275, while TD Cowen significantly boosted its target from $175 to $270. These upgrades reflect growing confidence in Seagate's ability to capitalize on the increasing demand for data storage solutions, particularly in the rapidly expanding AI sector.
The surge in Seagate's stock price is also lifting other players in the data storage industry, with Western Digital and SanDisk shares rising 5.96% and 6.24% respectively in pre-market trading. This broader sector movement underscores the growing investor optimism surrounding companies positioned to benefit from the AI-driven demand for high-capacity storage solutions.