Palantir (PLTR) has dominated headlines with its 143% surge in 2025, but another S&P 500 ($SPX) stock has quietly claimed the title of top performer. Seagate Technology (STX) has rallied an astounding 196% year-to-date (YTD), outpacing even the AI software giant, which is tied to explosive demand for data storage driven by the buildout of artificial intelligence (AI) infrastructure.
The hard disk drive manufacturer is riding a powerful wave that few investors saw coming. As tech giants invest hundreds of billions in AI data centers, they require massive data storage capacity to train large language models (LLMs).
Seagate specializes in nearline storage, which costs far less than faster alternatives while still meeting the needs of AI workloads that don’t require instant data access. The company shipped 137 exabytes of storage capacity to data centers last quarter, up 52% year-over-year (YoY).
In fiscal 2025 (ended in June), Seagate increased sales by 39% YoY to $9.1 billion, while gross margins expanded from 23% to 35% as supply constraints translated to pricing power. Moreover, adjusted earnings grew by 527% YoY to $8.10 per share. Management projects the data center storage market will nearly double from $13 billion in 2024 to $23 billion by 2028, with build-to-order pipelines already booked through mid-2026.
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Seagate’s technological edge comes from its heat-assisted magnetic recording technology, branded as Mozaic. These drives pack data into smaller spaces while using less energy, translating to lower costs per terabyte for cloud providers.
Three major cloud services have already qualified the Mozaic 3 platform, with the higher-capacity Mozaic 4 entering volume production in early 2026. By the second half of next year, Seagate expects these advanced drives to outsell traditional models.
Morgan Stanley recently hiked its STX stock price target to $265 from $168, citing an elongated demand cycle that could push gross margins above 45% by early 2027. Multiple analysts have followed suit with upgraded…
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