News

Data storage manufacturer Seagate (NASDAQ:STX) reported Q1 CY2025 results beating Wall Street’s revenue expectations , with sales up 30.5% year on year to $2.16 billion. On top of that, next quarter’s revenue guidance ($2.4 billion at the midpoint) was surprisingly good and 3.7% above what analysts were expecting. Its non-GAAP profit of $1.90 per share was 9.2% above analysts’ consensus estimates.

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Seagate Technology (STX) Q1 CY2025 Highlights:

"Seagate delivered another solid quarter of profitable year-on-year growth and margin expansion, elevating our non-GAAP EPS to the top of our guidance range. Our performance underscores the structural enhancements we’ve made to our business model and healthy supply/demand environment for mass capacity storage," said Dave Mosley, Seagate’s chief executive officer.

Company Overview

The developer of the original 5.25inch hard disk drive, Seagate (NASDAQ:STX) is a leading producer of data storage solutions, including hard drives and Solid State Drives (SSDs) used in PCs and data centers.

Sales Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Seagate Technology struggled to consistently generate demand over the last five years as its sales dropped at a 3.8% annual rate. This was below our standards and suggests it’s a lower quality business. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.

We at StockStory place the most emphasis on long-term growth, but within semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. Seagate Technology’s revenue over the last two years was flat, sugggesting its demand was weak but stabilized after its initial drop in sales.

This quarter, Seagate Technology reported wonderful year-on-year revenue growth of 30.5%, and its $2.16 billion of revenue exceeded Wall Street’s estimates by 1.1%. Beyond the beat, this marks 4 straight quarters of growth, implying that Seagate Technology is in the middle of its cycle - a typical upcycle generally lasts 8-10 quarters. Company management is currently guiding for a 27.2% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 15.9% over the next 12 months, an improvement versus the last two years. This projection is healthy and indicates its newer products and services will fuel better top-line performance.

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Product Demand & Outstanding Inventory

Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.

This quarter, Seagate Technology’s DIO came in at 96, which is 22 days above its five-year average, suggesting that the company’s inventory has grown to higher levels than we’ve seen in the past.

Key Takeaways from Seagate Technology’s Q1 Results

We were impressed by how significantly Seagate Technology blew past analysts’ EPS expectations this quarter. We were also glad its adjusted operating income outperformed Wall Street’s estimates. On the other hand, its inventory levels materially increased. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 6.6% to $87.01 immediately following the results.

Sure, Seagate Technology had a solid quarter, but if we look at the bigger picture, is this stock a buy? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free .