Forward Future Seagate Profit Triples to $1.76 Billion — and Its Stock Still Fell 8% After Hours
2026-10-27
Seagate Technology (NASDAQ: STX) reported record profitability on Tuesday, October 27, 2026 — net income more than tripled to $1.76 billion and revenue jumped 61% — yet its shares fell about 8% in after-hours trading, because a stock that had already risen roughly one-and-a-half times this year needed more than a beat. The sell-off made Seagate the sharpest after-hours mover of a busy earnings evening that also included Visa.
What happened: the headline numbers beat expectations
For its fiscal first quarter, ended October 2, Seagate reported net income of $1.76 billion, or $7.59 per share, up from $549 million, or $2.43 per share, a year earlier. On an adjusted basis, earnings were $7.68 per share, beating the $7.45 expected by analysts polled by FactSet. Revenue rose to $4.23 billion from $2.63 billion a year ago, ahead of the $4.15 billion consensus. Gross margin widened dramatically to 57.3% on a GAAP basis, from 39.4% a year earlier, and operating margin reached 48.8%.
The cash numbers were just as strong. Seagate generated $1.7 billion in operating cash flow and $1.5 billion in free cash flow — what chief executive Dave Mosley called the company's highest ever free cash flow in a September quarter. It retired about $1.2 billion of debt during the quarter, returned $568 million to shareholders through dividends and buybacks, and raised its quarterly dividend about 3% to $0.76 per share, payable January 7 to shareholders of record on December 23.
Guidance beat too — by a wide margin
Seagate's outlook for the current quarter also came in well above Wall Street's numbers. The company guided to revenue of $4.8 billion, plus or minus $100 million, and adjusted earnings of $9.20 per share, plus or minus $0.20. Analysts had expected about $8.66 per share on roughly $4.55 billion of revenue, according to Dow Jones reporting. In other words, both the quarter just reported and the quarter now under way cleared the published consensus.
Why the stock fell anyway
Expectations were higher than the official consensus. One widely followed earnings tracker put the unofficial "whisper number" for adjusted earnings at $7.75 per share — above the $7.68 Seagate actually delivered, even though that figure beat the formal FactSet estimate. When a stock has run as hard as Seagate's, the whisper number, not the consensus, is often the real bar.
The run-up left no room for merely great. Seagate closed regular trading up 3.7% at $667.85, having gained roughly 140–150% so far in 2026 as artificial-intelligence data centers drove demand for its hard-disk drives. Barron's noted the shares are still down about 43% from their all-time closing high on June 22, a sign of how violently the AI-storage trade has swung this year. Record profitability, Barron's argued, had become the baseline expectation rather than a reason to buy more.
Two smaller details gave sellers ammunition. Capital spending of $211 million came in slightly above the $202 million analysts had forecast, echoing the reaction last week when rival Western Digital beat earnings but left investors worried about rising capital expenditures. Inventory also ran above its historical average — days inventory outstanding of 86, about five days above its five-year average — which some analysts flagged as a watch item if demand cools. After hours, the shares fell 7.9% to $614.79 in Dow Jones reporting, after trading as low as $613.50 during the slide.
Why storage is an AI story now
Seagate's surge is part of the same trade that lifted memory and chip stocks on Tuesday, when the iShares Semiconductor ETF (SOXX) closed almost 4% higher and memory names including Micron, Western Digital and SanDisk advanced. AI systems create and retain enormous volumes of data, and that data has to live somewhere — increasingly on Seagate's high-capacity drives. Mosley said "data creation, retention and reuse continue to compound storage demand," and described long-term customer visibility that supports "a multi-year growth phase," pointing to the company's HAMR-based drive roadmap and disciplined supply as the strategy behind the record margins.
What is next
The immediate question is whether Tuesday evening's drop holds when regular trading resumes on Wednesday, October 28 — the same day the Federal Reserve announces its rate decision and Microsoft and Alphabet report earnings, two events that will set the tone for the whole AI trade. Investors will also watch Western Digital's next update for confirmation that storage pricing and demand are holding across the industry, and Seagate's fiscal second quarter, where the company now has to deliver against its own raised bar of $9.20 per share. This post reports what happened and why the market reacted; it is not a recommendation to buy, sell or hold any security.
Sources
Dow Jones via Morningstar · Barron's · Seagate fiscal Q1 2027 results (Business Wire) · Shacknews · Investopedia markets live blog, Oct. 27, 2026
FAQ
Did Seagate beat earnings expectations?
Yes, on the published consensus. Adjusted earnings of $7.68 per share beat the $7.45 FactSet estimate, and revenue of $4.23 billion beat the $4.15 billion expected — but the result fell short of the roughly $7.75 "whisper number" some traders were using.
Why did Seagate stock fall after a beat?
Because expectations were even higher than the results. The stock had gained roughly 140–150% in 2026 before the report, capital spending came in slightly above forecasts, and inventory ran above its five-year average, giving investors reasons to take profits.
What did Seagate guide for next quarter?
Revenue of $4.8 billion, plus or minus $100 million, and adjusted earnings of $9.20 per share, plus or minus $0.20 — both well above analyst expectations of about $8.66 per share on $4.55 billion.
How much profit did Seagate make?
Net income was $1.76 billion, or $7.59 per share, more than triple the $549 million, or $2.43 per share, earned a year earlier, with free cash flow of $1.5 billion.