Seagate Technology (STX) Goldman Sachs Communacopia + Technology Conference 2026 summary

Industry trends and demand drivers

• AI infrastructure build-out is in early stages, with strong CapEx growth from public cloud and on-prem data centers fueling storage demand.

• Exabyte growth is driven by new applications like video AI, robotics, and autonomous vehicles, with data value making storage costs minimal compared to recomputation.

• Absolute exabyte growth is prioritized over percentage growth, as larger bases yield higher revenue impact.

• Demand for storage is expected to remain robust due to the proliferation of data-centric applications.

Technology and product strategy

• Technology advancements, especially HAMR, enable significant exabyte growth and higher capacity drives, with 30 TB and 40 TB drives already in market and 50 TB targeted for 2027.

• HAMR adoption is accelerating, with expectations that 80-90% of data center volume will be HAMR-based within a couple of years.

• Internal laser production for HAMR drives reduces costs and improves margins, with a shift from external to internal sourcing underway.

• PMR technology will remain for lower-capacity drives, but HAMR will dominate high-capacity segments.

Financial performance and outlook

• Pricing strategy changes and technology transitions have nearly tripled gross margins over three years, with continued improvement expected.

• Revenue and margin growth are projected for every quarter of the current fiscal year, supported by strong purchase orders.

• Incremental gross margins have exceeded 70% in recent quarters, well above previous 50% targets.

• Capital allocation is shifting toward increased share buybacks after debt reduction, with dividend increases considered but not prioritized.