While Seagate Technology Holdings plc STX data center business remains the primary growth engine, its Edge IoT business is also seeing steady momentum.
Seagate reports revenues under two end markets: Data Center, serving hyperscale, CSP, OEM and enterprise customers, and Edge IoT. Edge IoT broadens Seagate's exposure beyond hyperscale and enterprise data centers into industrial, commercial and consumer environments where data is increasingly created, processed and stored closer to its source.
Its Edge IoT portfolio ranges from 1TB to 32TB storage solutions and supports video and image applications, network-attached storage, smart infrastructure, gaming, streaming, personal computing, creative workflows and data backup.
In the fourth quarter of fiscal 2026, Edge IoT accounted for 19% of revenues, at $697 million, up 20% year over year and 14% sequentially. Ongoing supply constraints and favorable NAND pricing acted as tailwinds.
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On the last earnings call, management also noted that unstructured information, including video and sensor data, is increasingly being generated across enterprise and edge environments. These applications can require considerable processing and storage, especially when organizations want to retain data rather than recompute it repeatedly.
However, sustaining Edge IoT growth may not be straightforward. Edge IoT has historically been seasonal, with stronger demand generally occurring in the first half of Seagate's fiscal year due to back-to-school and holiday spending. STX did not provide a separate revenue outlook for Edge IoT, making it difficult to determine whether the segment can sustain the latest 20% year-over-year growth rate.
The company also acknowledged that SSDs continue to displace lower-capacity HDDs in Edge IoT and client applications.
Edge IoT offers Seagate a complementary growth, but whether the recent momentum can persist depends on demand across edge applications, relative HDD-versus-SSD economics and competitive pressure from both HDD rivals and flash-based storage.
Western Digital WDC is one of STX's closest competitors. Favorable pricing tailwinds are also benefiting non-cloud HDD markets. In its fiscal fourth quarter, WDC's Client revenues rose 61% year over year to $225 million, while Consumer revenues increased 38% to $187 million, with both businesses benefiting from improved pricing. Management added that pricing opportunities in Client and Consumer were partly influenced by the pricing of alternative flash-based products.
Western Digital continues to benefit from robust demand, stronger long-term visibility and favorable pricing across its end markets. At the midpoint of its guidance, Western Digital anticipates first quarter fiscal 2027 revenues of $4.1 billion (+/- $100 million), up 45% year over year.
NetApp NTAP is positioning its platform around AI-ready data infrastructure, providing unified storage, robust security and a single control plane across hybrid multi-cloud environments. For the first quarter of fiscal 2027, NetApp's All-flash array revenues came in at $1.31 billion, up 47% from the prior-year quarter. NetApp won approximately 350 AI and data lake modernization deals, with management noting larger deal sizes as customers moved from proof of concept to production.
Management further said some customers are shifting from flash-based systems toward hybrid flash for lower-value workloads as pricing rises.
In the past month, STX's shares have lost 16.5% compared with the Zacks Computer Integrated Systems industry decline of 1.8%.
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STX's shares are trading at a forward price-to-earnings multiple of 20.39X, higher than the industry's 11.97X.
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The Zacks Consensus Estimate for STX's earnings for fiscal 2026 has been revised up 28.7% to $36.09 over the past 60 days.
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Currently, Seagate sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
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This article originally published on Zacks Investment Research (zacks.com).