Seagate's Q4 Earnings Ahead: Is a Beat in the Cards Again?

Seagate Technology Holdings plc (STX) is scheduled to report fourth-quarter fiscal 2025  earnings on July 29, after the closing bell.

The Zacks Consensus Estimate for fourth-quarter fiscal 2025 earnings is pegged at $2.46 per share, suggesting a rise of 134.3% year over year. The Zacks Consensus Estimate for revenues is currently pegged at $2.41 billion, indicating a 27.5% uptick from the year-ago actual.

Management anticipates quarterly revenues of $2.4 billion (+/- $150 million). Non-GAAP earnings are expected to be $2.4 per share (+/- 20 cents).

STX’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 15.67%. Shares of Seagate have gained 47.3% over the past year compared with the Computer Integrated Systems industry’s growth of 20.6%.

Underlying Drivers Shaping STX’s Q4 Results

Seagate is seeing a rise in demand for mass capacity storage, driven by growing nearline cloud requirements. This surge aligns with ongoing cloud investment cycles and the expansion of AI-ready data centers. Cloud service providers are increasingly prioritizing AI application development and infrastructure buildout. Seagate considers hard disk drives (HDDs) essential for supporting these phases of AI adoption and expects HDD demand to have accelerated in the quarter under discussion.

It continues to see strong demand for high-capacity nearline products from cloud customers worldwide. Coupled with a gradual improvement in the VIA market, this is expected to have increased revenues and profits in the June quarter.

Seagate expects secular trends and innovations to increase areal density, benefiting mass capacity storage. Management noted that the launch of the Mozaic 3+ hard drive platform in 2024, which features HAMR technology, positions it well to capture market share in mass capacity storage solutions. It expects HAMR to help capitalize on megatrends like AI and machine learning, which will drive long-term demand for affordable mass capacity storage solutions. STX has substantially increased production of its 24-28 terabyte PMR drives, now representing the company's top-selling product line in both revenue and exabyte shipments.

Seagate's technology strategy remains closely aligned with shifting market trends. One of the key drivers of its strategic roadmap is the ramp-up of its HAMR technology to meet surging cloud customer demand. Its HAMR-based Mozaic drives are the industry’s only products offering 3 terabytes per disk. Volume shipments to qualified customers are underway, and the company remains on schedule to broaden qualifications across more cloud customers, with wider shipments expected in the second half of calendar 2025.

Seagate Technology Holdings PLC Price and EPS Surprise

Seagate Technology Holdings PLC price-eps-surprise | Seagate Technology Holdings PLC Quote

We expect mass capacity revenues to be up 39.5% year over year to $2 billion in the fiscal fourth quarter.

Our estimate for revenues from the HDD segment is pegged at $2.25 million, indicating an increase of 30.1% from the year-ago actual. The estimate for the non-HDD (which includes enterprise data solutions, cloud systems and solid-state drives) segment is pegged at $154.6 million, down 3.4% from the prior-year level.

Margin performance is likely to have improved due to solid demand for its latest nearline offerings, such as Mozaic, along with continued efforts to optimize pricing. We expect non-GAAP gross margin for the fiscal fourth quarter to be 36.8%, up from 30.9% recorded in the prior-year quarter.

Nonetheless, Seagate earns much of its revenue from outside the United States, making it vulnerable to currency exchange rate changes. A weak euro or pound against the dollar can hurt its results and limit growth. Global macro pressures related to tariff uncertainty and rising debt load remain additional worries for the management.

What the Zacks Model Unveils About STX

Our proven model predicts an earnings beat for Seagate this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is exactly the case here.

Seagate has an Earnings ESP of +2.34% and a Zacks Rank #2 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks With Favorable Combination

Here are some other companies with the right combination of elements to post an earnings beat in their upcoming releases.

Emerson Electric Co. (EMR), expected to release earnings on Aug. 6, currently has an Earnings ESP of +0.46% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for Emerson Electric’s earnings for the third quarter of fiscal 2025 is pegged at $1.51 per share, indicating year-over-year growth of 5.6%. EMR has a trailing four-quarter average surprise of 3.4%.

Illinois Tool Works Inc. (ITW), slated to release second-quarter 2025 results on July 30, has an Earnings ESP of +1.19% and a Zacks Rank of 3 at present.

The Zacks Consensus Estimate for Illinois Tool Works’ second-quarter 2025 earnings is pegged at $2.56 per share, suggesting a year-over-year rise of 0.8%. ITW has a trailing four-quarter average surprise of 3%.

QUALCOMM Incorporated (QCOM) has an Earnings ESP of +0.60% and a Zacks Rank #3. It is scheduled to report quarterly figures on July 30. The Zacks Consensus Estimate for QCOM’s to-be-reported quarter’s earnings and revenues is pegged at $2.68 per share and $10.36 billion, respectively. QCOM has a trailing four-quarter average surprise of 6.4%.

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This article originally published on Zacks Investment Research (zacks.com).

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