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JPMorgan initiates Seagate coverage citing supply tightness and pricing upside
Monday, March 30, 2026 at 10:52 AM
JPMorgan has initiated coverage on Seagate (STX), echoing previous channel checks from Edgewater regarding a tightening supply of hard disk drives and significant upside for pricing in the storage market.
Context
JPMorgan has initiated coverage on Seagate Technology (STX) with a bullish outlook, echoing recent industry checks from Edgewater Research that highlight significant pricing upside and a tightening supply environment for Hard Disk Drives (HDDs). This shift is driven by a structural surge in AI-driven demand, with Western Digital also reporting that its HDD capacity is fully committed. The market is increasingly reflecting a cost-widening gap where flash storage remains 4 to 10 times more expensive than high-capacity HDDs, forcing enterprise and cloud customers to pivot back to mechanical storage for massive data lakes and 'agentic AI' workloads.
In its latest fiscal Q2 2026 results, Seagate reported record performance with a non-GAAP EPS of $3.11, beating analyst estimates by over 11%. The company’s HAMR-based Mozaic platform is seeing rapid adoption as it targets capacities of 30TB to 40TB. While recent Google Research into algorithms like TurboQuant sparked fears that software efficiency might reduce memory needs, the physical reality of data center expansion remains dominant. Management has affirmed that nearline exabyte supply is largely committed through 2026, reinforcing a period of disciplined pricing and sustained margin expansion.
Sources (10)
Dell PowerScale: Scaling With Confidence Amid Supply Constraints | Dell
Seagate - Seagate Technology Reports Fiscal Second Quarter 2026 Financial Results
OPTIMIZING MANUFACTURING USING AIC1Q 2024 Hard Disk Drive Industry UpdateResearch Update: Seagate Technology Holdings PLC | S&P Global RatingsWall Street didn't like what Google just revealed - TheStreet2024–present global memory supply shortage - WikipediaAI data centers are swallowing the world's memory and storage supply, setting the stage for a pricing apocalypse that could last a decade | Tom's Hardware
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