Shares of Seagate Technology (NASDAQ:STX) jumped sharply in U.S. premarket trading on Wednesday after the data storage specialist delivered second-quarter adjusted earnings that came in well ahead of market expectations and issued robust guidance.
Seagate’s stock has risen almost fourfold over the past year, propelled by the rapid expansion of artificial intelligence data centres. That buildout has significantly boosted demand for hard drives and other storage solutions, as cloud providers rush to secure the infrastructure required to train and operate advanced generative AI models. The trend has benefited Seagate alongside industry peer Western Digital.
For the second quarter, Seagate reported adjusted earnings of $3.11 per share, up from $2.03 a year earlier and above the consensus forecast of $2.83. Revenue increased 22% year on year to $2.83 billion, beating analyst estimates of $2.75 billion.
Profitability also improved markedly. Adjusted gross margin climbed to 42.2% from 35.5% in the prior-year period, exceeding expectations of around 41%. Adjusted operating margin rose to 31.9%, compared with 23.1% a year earlier and ahead of the 30.7% consensus estimate. Free cash flow surged to $607 million, up from $150 million in the same quarter last year.
Looking ahead, Seagate issued guidance for its fiscal third quarter of 2026 that topped forecasts. The company expects revenue of $2.90 billion, plus or minus $100 million, and adjusted diluted earnings per share of $3.40, plus or minus $0.20. Analysts had been projecting earnings of $3.01 per share on revenue of $2.79 billion.
Commenting on the outlook, Morgan Stanley analysts said, “We don’t see this story de-railing anytime soon as data generation, Agentic AI, and video remain sustainable drivers,” underscoring confidence that structural demand trends will continue to support the business.