Seagate Technology Leads S&P 500: What's Behind Its 120% Gain?

What would be your first guess if you were told the S&P 500’s biggest gainer of the year was an artificial intelligence play? Before reading this headline, it would’ve likely been Palantir, NVIDIA, or maybe Broadcom. 

And yes, all three of those stocks have produced stellar gains in 2025, but none can claim the top spot amongst the largest 500 companies trading on U.S. exchanges.

That award (right now) goes to Seagate Technologies Holdings plc (NASDAQ: STX), which is up more than 120% so far in 2025.

Can this rally continue, or is the stock starting to lose momentum? Read on to learn more about the S&P 500’s newest top dog.

Seagate HDDs are Crucial for AI Data Centers

Seagate Technologies is now a $40 billion company, with more than $9 billion in sales over the last 12 months, primarily driven by its hard disk drives (HDDs) and solid-state drives (SSDs). The company has a diverse product array in this space.

Still, the innovation that has investors excited recently is the Heat-Assisted Magnetic Recording (HAMR) HDDs, which Seagate began shipping in July. These drives build on the Mosaic HDDs the company started selling last year and offer unprecedented capacity.

As you might have heard, AI data centers are tremendous energy hogs. They need vast amounts of electricity, sophisticated processors, and hard drives with Herculean storage capacities.

Even the air conditioners are unique innovations!

Seagate’s contribution to the data center gold rush is its line of HAMR HDDs (no more acronyms after this, promise). These drives can hold between 30 and 36 terabytes, making them the highest-capacity drives in the industry. 

As data center memory requirements continue to expand, Seagate’s HAMR drives are proving to be a necessary investment for AI hyperscalers. The price-per-terabyte continues to be a value compared to flash memory drives, and there’s no greater evidence of this than Seagate’s astonishing earnings growth.

Robust Earnings Growth Has Analysts Raising Expectations

Earnings reports for tech sector giants have become must-see TV for the stock market, and Seagate’s release might need to be added to the docket. The company reported Q4 2025 earnings after the market closed on July 29 and capped the fiscal year with a double-digit top- and bottom-line beat and record annual revenue.

The quarter ending in June generated $2.44 billion in revenue and an EPS of $2.59, marking the fourth time the company hit the $2 billion quarterly revenue mark in fiscal 2025. Revenue grew 13% from the previous quarter, and nearly 30% year-over-year (YOY). And the C-suite doesn’t expect these numbers to drop anytime soon.

Seagate recently surveyed business leaders across 15 different industries, and 61% of respondents projected their cloud storage needs would double by 2028.

Revenue isn’t the only factor investors are noticing during earnings. Seagate is also a profit-sharing machine, with plans to return $600 to $800 million to shareholders in the form of dividends, plus an additional $5 billion in buybacks.

The current yield is 1.50%, and the most recent raise occurred in October, when the company boosted quarterly payments to 72 cents per share from 70 cents. Seagate also reported more than $475 million in free cash flow in June, so there’s plenty of ammunition for more shareholder returns.

Analysts are highly bullish on STX shares, with 14 Buy recommendations, five Hold Recommendations, and one Sell recommendation based on 19 research firms MarketBeat covers reporting on the stock.

However, price target increases haven’t kept up with the actual price increases, with the consensus target of $157 currently 18% lower than the market price. However, CitiGroup updated its analysis on Sept. 9, boosting its price target to a Street-high $215.

Technical Signals Indicate Strong Upward Momentum

The STX daily chart also shows a stock with plenty of upside remaining. Shares dipped to $66.54 on April 8 before Trump’s tariff pause set up a roaring rally. The stock topped the $190 mark earlier this week, and technical trends are pointing to strengthening momentum. 

The share price broke above the 50- and 200-day simple moving averages in May and now trades comfortably above the 20-, 50-, 100-, and 200-day SMAs.

Resistance began appearing around the $155 mark in August, but a new breakout materialized as the stock bounced off its 50-day SMA.

A bullish cross on the MACD confirms the latest breakout, indicating that upward momentum has resumed with vigor.

Outlook for 2026 Depends on Continued AI Growth

Most signs point to more gains throughout the year and into 2026, but investors should consider a few areas of caution. Valuation is becoming a concern for Seagate, which now trades well above historical averages at more than 3x sales and 28x forward earnings. 

The company’s Q1 2026 guidance projections also came in slightly below the expected figure, and the stock actually lost 3% the day following its Q4 earnings release.

Obviously, the price quickly rebounded, but this blip shows that investors are demanding near-perfect results from the company. 

Finally, Seagate’s primary customers are AI hyperscalers, which are currently spending CapEx like sailors on leave. But this dependence on a single industry presents a systematic risk.

Should AI CapEx spending slow unexpectedly, Seagate’s revenue could decline significantly. However, the macro environment is strong right now, and analysts from Morgan Stanley call for dip buying on any potential pullbacks.

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The article "Seagate Technology Leads S&P 500: What’s Behind Its 120% Gain?" first appeared on MarketBeat.