Seagate Earnings Highlight AI Storage Demand
Seagate earnings on Oct. 27 showed record margins and $1.479 billion free cash flow, spurring investor flows into AI storage and balance-sheet repair.
KEY TAKEAWAYS
- Revenue rose to $4.2 billion with GAAP gross margin 57.3% and GAAP diluted EPS $7.59.
- Operating cash flow was $1.7 billion and free cash flow was $1.5 billion.
- The company retired about $1.2 billion of debt and tied results to AI storage demand.
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Seagate Technology reported on Oct. 27, 2026, record profitability and stronger cash flow after management cited rising demand for mass-capacity storage linked to AI infrastructure. The company also raised its fiscal second-quarter guidance.
Quarterly Results and Profitability
Seagate said in a press release on Oct. 27, 2026, that fiscal first-quarter 2027 revenue reached $4.233 billion for the quarter ended Oct. 2, 2026, up from $2.629 billion a year earlier. GAAP net income rose to $1.761 billion, with GAAP diluted earnings per share (EPS) of $7.59. Non-GAAP net income was $1.781 billion, and non-GAAP diluted EPS was $7.68, each higher than the prior year.
Margins expanded sharply. GAAP gross margin increased to 57.3% from 39.4%, and GAAP operating margin rose to 48.8% from 26.4%. Non-GAAP gross margin was 57.8%, and non-GAAP operating margin reached 50.7%. Operating cash flow totaled $1.690 billion, while free cash flow, a measure of cash generated after capital expenditures, was $1.479 billion.
Dave Mosley, Seagate chair and chief executive officer, said the quarter demonstrated the company’s earnings power amid strengthening demand. “Seagate delivered another quarter of record profitability and our highest ever free cash flow in the September quarter,” he said.
Guidance, Demand Outlook, and Capital Allocation
Seagate guided fiscal second-quarter 2027 revenue to approximately $4.8 billion, plus or minus $100 million, with non-GAAP diluted EPS of $9.20, plus or minus $0.20. Management attributed the results and outlook to strengthening demand for mass-capacity storage, including AI infrastructure. The company published material on Oct. 26 highlighting high-capacity storage scaling for AI and cloud infrastructure.
During the quarter, Seagate retired about $1.2 billion of principal debt, reducing gross debt to $2.4 billion at quarter-end. After the quarter, it retired an additional $750 million, lowering gross debt to $1.6 billion. The company returned $568 million to shareholders through dividends and share repurchases during the period.
At Oct. 2, 2026, Seagate held $1.3 billion in cash and cash equivalents and reported roughly 230 million ordinary shares outstanding. The board declared a quarterly cash dividend of $0.76 per share, payable Jan. 7, 2027, to shareholders of record at the close of business on Dec. 23, 2026.
