Seagate's Mozaic 3+ Ramp Gains Momentum Across Global CSPs

Seagate Technology Holdings plc STX is gaining traction with its next-generation, Heat-Assisted Magnetic Recording (HAMR)-based Mozaic 3+ platform, as momentum builds among global cloud service providers (CSPs). In the last earnings call, management stated that fiscal fourth-quarter 2025 results underscore that its transition toward high-capacity, energy-efficient drives is paying off both technologically and financially.

In the last earnings call, management also stated that Seagate’s Mozaic 3+ products mark a decade-long engineering feat that enables breakthrough areal density and total cost of ownership (TCO) advantages. The company has already qualified three major CSPs on Mozaic 3+, with additional qualifications progressing smoothly. Shipments expanded to more cloud customers in the last reported quarter, reinforcing Seagate’s strong momentum. Building on this traction, the platform is poised to become a cornerstone of the company’s mass-capacity growth strategy in the coming quarters.

The HAMR-based drives are designed to meet surging global demand for data-intensive workloads, particularly those driven by artificial intelligence and cloud storage expansion. Nearline shipments rose 52% year over year to 137 exabytes in the June quarter, with record sales for Seagate’s 24TB and 28TB PMR platforms, showing strong complementary demand alongside the Mozaic series.

Management highlighted that the Mozaic ramp continues to be margin-accretive, contributing to record non-GAAP gross margins of 37.9% and operating margins of 26.2% in the fourth quarter. The company’s build-to-order model has also ensured that nearline production capacity remains primarily committed through mid-2026, reflecting customer confidence in Seagate’s execution and supply reliability.

Looking ahead, Seagate plans to begin qualification of its Mozaic 4+ drives, with up to 44TB capacity, during the first half of fiscal 2026. Together, Mozaic 3+ and 4+ reinforce Seagate’s leadership in high-capacity storage, enabling global CSPs to meet exponential data growth efficiently and sustainably.

However, Seagate faces tough competition from other players in the data storage industry, including HDD and SSD manufacturers, such as Western Digital Corporation WDC and Pure Storage, Inc. PSTG. Moreover, the ongoing global macroeconomic troubles and volatile supply-chain dynamics are likely to remain concerns.

Taking a Look at How WDC & PSTG Strengthen CSP Focus

Western Digital is capitalizing on surging AI-driven data demand, focusing on high-capacity HDDs and next-generation storage technologies like ePMR, UltraSMR and HAMR. In the fourth quarter of fiscal 2025, the company shipped more than 1.7 million units of 26TB and 32TB drives, achieving one of its fastest product ramps ever. With firm purchase commitments from major hyperscale customers and improving margins from high-capacity drives, the company’s strategic emphasis on reliability and scalability positions it well against its competitors. WDC’s robust balance sheet, expanding data center share and continued innovation in mass storage make it a key rival in the evolving CSP infrastructure landscape.

Pure Storage continues to strengthen its foothold in the enterprise and hyperscale markets through its all-flash, software-driven data storage solutions. In the second quarter of fiscal 2026, the company reported 13% year-over-year revenue growth, fueled by expanding adoption of its Evergreen//One and Cloud Block Store services. Pure’s collaboration with Meta on large-scale DirectFlash deployments highlights its growing relevance in the hyperscale ecosystem, a segment critical to AI workloads and cloud data management. By delivering high efficiency, lower total cost of ownership and energy savings, Pure Storage positions itself as a strong competitor in serving cloud-service providers with next-generation, flash-based storage innovation.

STX Price Performance, Valuation and Estimates

In the past year, shares have gained 123.5% compared with the Zacks Computer Integrated Systems industry’s growth of 53.6%.

In terms of forward price/earnings, STX’s shares are trading at 21.76X, lower than the industry’s 24.09X.

The Zacks Consensus Estimate for STX’s earnings for fiscal 2026 has been revised up 2.04% to $10.51 over the past 60 days.

Currently, Seagate carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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