BofA raises Seagate stock price target after CEO signals AI storage supercycle
Most people think of Artificial Intelligence (AI) as a computing story. Chips, GPUs, data centers. The hardware that processes the intelligence.
Seagate CEO Dave Mosley wants investors to think about what comes after the processing. All that AI activity - every model trained, every inference run, every video analyzed, every agent deployed - generates data. Enormous, persistent, compounding quantities of data that need to live somewhere.
That somewhere is Seagate's business. And Mosley just told Bank of America's clients something worth paying attention to.
BofA hosted a client call with Mosley this week and raised its Seagate Technology (STX) price target to $900 from $840. That maintained its Buy rating, according to an Investing.com note.
STX is trading at $848.91, up 208.84% year-to-date and 662.80% over the past year, according to Yahoo Finance. The storage giant has become one of the most remarkable stock stories of 2026, and Mosley's message suggests the structural case for that run is not diminishing.
What Seagate's CEO told BofA clients
The central argument Mosley made in the BofA client call, as reported by Investing.com, is straightforward but easy to underappreciate in a market fixated on semiconductor stocks.
Data is an increasingly valuable asset. And the sources generating it are multiplying simultaneously. Video. Unstructured data. Robotics. Physical AI systems that need to record and process real-world environments.
Agentic AI architectures that create data snapshots, checkpoints, and redundancy requirements at scale. Each of these represents a structural, not cyclical, driver of storage demand.
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Mosley described the monetization opportunities associated with incremental storage as far outweighing the costs. That is a margin argument that is showing up in Seagate's financial results.
The CEO also flagged that strong demand is not just coming from hyperscalers. Traditional enterprise data centers and edge applications are contributing meaningfully, broadening the demand base beyond a handful of cloud giants.
According to the note, BofA raised its price target multiple to 31 times calendar year 2027 estimated EPS of $29.28 from a prior 29 times, citing higher confidence in the sustainability of demand and pricing. The new $900 target is 6% above the current trading level.
Seagate's Q3 fiscal 2026 results validated everything the bull case predicted
Seagate's fiscal third-quarter 2026 results, reported April 29, were records across the metrics that matter most:
- Revenue of $3.11 billion, up 44% year over year.
- Non-GAAP gross margin of 47%, representing record margin performance
- Non-GAAP diluted EPS of $4.10, up 116% year over year.
- Cash flow from operations of $1.1 billion; free cash flow of $953 million
- Retired $641 million in debt while returning $191 million to shareholders through dividends and buybacks
Source: Seagate Technology Third Quarter 2026 Results
"Seagate delivered outstanding March quarter results, exceeding the high end of our revenue and EPS guidance, achieving record margin performance, and generating close to $1 billion in free cash flow," Mosley said in the release.
My review of the revenue trajectory reflects a business running at a significantly different pace than the company it was two years ago.
Revenue growth of 29% over the last 12 months, with 18 analysts revising earnings upward recently, according to InvestingPro data, captures a sustained improvement rather than a single-quarter anomaly.
The Mozaic platform is the technical engine behind Seagate's margin and capacity story
The product story underlying Seagate's financial momentum centers on the Mozaic platform - the company's Heat-Assisted Magnetic Recording technology that enables dramatically higher storage density per drive.
Seagate has now qualified Mozaic 3 at all planned cloud service providers, and two customers are already qualified on Mozaic 4, according to a Seagate statement. Full qualification across hyperscalers removes the sales friction that characterized the early ramp and allows Seagate to deliver at volume.
The density advantage matters for customers in a specific way. Higher capacity drives mean fewer drives needed per petabyte of storage. That involves reducing energy consumption, data center floor space, and capital expenditure for cloud operators simultaneously.
Related: Seagate stock price falls after CEO's rattling warning
In a market where hyperscalers spend hundreds of billions annually on infrastructure, the economics of density improvement are directly tied to procurement decisions.
BofA reiterated its Buy rating on secular demand from cloud, revenue and margin improvement, and the path to even higher capacity HAMR drives in its note. Mozaic 4 and beyond represent the roadmap that extends Seagate's technology advantage.
What the AI storage supercycle means for investors
STX has returned 659.86% over the past year and 208% year-to-date, versus the S&P 500's 9.84% gain, according to Yahoo Finance. At those levels, the valuation question is unavoidable. InvestingPro analysis suggests the stock may be overvalued at current prices, a counterpoint that the firm itself acknowledged alongside its raised target.
The tension is real. A 31X 2027 earnings multiple on a hard disk drive company would have seemed absurd two years ago. What has changed is the demand structure.
Related: Seagate adds $15B in market cap on surprise news
If Mosley's characterization of AI as an amplifier of data creation is correct and the quarterly results support it, then Seagate is no longer a commodity storage business.
It is essential infrastructure for the AI era, with improving margins, a differentiated technology roadmap, and a demand tailwind, with CEO, analyst, and hyperscaler procurement decisions all pointing in the same direction.
The $900 BofA target implies modest upside from the current level of $845. The more important question is whether the structural demand thesis Mosley described holds through 2027 and beyond. And whether Seagate's Mozaic platform maintains its density and pricing advantages as competitors respond. So far, the evidence is running in Seagate's favor.
Related: Seagate CEO sends a bold message on AI and data storage
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This story was originally published May 27, 2026 at 8:33 AM.