Driven by increased demand for data storage resulting from the spread of AI (artificial intelligence), U.S. storage company Seagate’s quarterly revenue surged 61% year-on-year. The operating profit margin also jumped from 26% to 49%, marking a significant improvement in profitability. This indicates that the benefits of expanded AI infrastructure investment are spreading beyond semiconductors into the data storage device market.
Seagate announced on the 28th that it recorded revenue of $4.233 billion and an operating profit margin of 48.8% for the first quarter of fiscal year 2027 (ended October 2, 2026). Revenue increased by 61.0% compared to the same period last year ($2.629 billion). The operating profit margin rose by 22.4 percentage points from 26.4% to 48.8%.
Net income surged 220.8%, from $549 million to $1.761 billion. The gross profit margin also increased by 17.9 percentage points, from 39.4% to 57.3%. The fact that the rate of profit growth was much steeper than the rate of revenue growth highlights the improvement in profitability.
Behind the earnings improvement is the growing demand for high-capacity data storage driven by the expansion of AI and cloud infrastructure. As demand grows to store vast amounts of data generated during AI model training and service operations over long periods, the importance of high-capacity HDDs (hard disk drives) is also increasing.
Seagate is pursuing a strategy that prioritizes profitability alongside expanding storage capacity. This involves using HAMR (Heat-Assisted Magnetic Recording) technology to increase disk recording density while managing supply and maintaining a pricing policy based on product value. HAMR is a technology that allows more data to be stored in the same space, and it is used to enhance storage efficiency in data centers.
Dave Mosley, Seagate’s Chairman and CEO (Chief Executive Officer), stated, “We once again recorded record-level profitability in the September quarter, and free cash flow also reached an all-time high,” adding, “Visibility into long-term customer demand supports our outlook for a multi-year growth phase.”
Cash generation capabilities have also been strengthened. Seagate recorded operating cash flow of $1.7 billion and free cash flow of $1.5 billion this quarter. The company repaid approximately $1.2 billion in debt principal and returned $568 million to shareholders through dividends and share buybacks. The quarterly dividend was also raised by about 3% to $0.76 per share.
Seagate forecast that the growth trend will continue next quarter. Seagate presented its revenue outlook for the second quarter of fiscal year 2027 at $4.8 billion (±$100 million). Based on the midpoint of the outlook, this represents a 13.4% increase from the current quarter. The non-GAAP (non-GAAP) diluted earnings per share outlook is $9.20, which is 19.8% higher than the current quarter ($7.68).
in TECH
