Seagate Earnings Call to Counter Market Pessimism: Revenue and Gross Profit to Double in FY2027, Near-line Production Capacity Locked in until 2028, Customers Already Booked for 2029

July 29th, Seagate Technology strongly pushed back against market pessimism in a conference call. CEO Dave Mosley explicitly promised that revenue growth in fiscal year 2027 will surpass that of 2026, with a projected full-year growth of 34%. CFO Gianluca Romano further stated that "quarterly revenue growth and gross margin improvement will be achieved throughout fiscal year 2027." The current near-line hard drive capacity has been locked in through long-term supply agreements until 2028, and customer planning extends to 2029.

More importantly, the supply-demand gap is widening—Mosley revealed that contracts typically lock in for a year, but additional capacity released after yield improvements often leads customers to pay prices higher than contract prices, driving price increases in a step-wise manner each quarter. The September quarter gross margin guidance is around 57% with an operating margin of about 50%. Romano clearly stated that incremental gross margin will far exceed 60% and confirmed that early HAMR customer discounts will be completely phased out in the September quarter, further raising the average selling price.

On the technical front, the HAMR roadmap is progressing as planned: Mosaic 3 has been certified and is in mass production for all major cloud customers, Mosaic 4 (up to 44TB/disk) has ramped up with significant financial contributions from the world's two largest CSPs, and Mosaic 5 (5TB+/disk) is expected to begin certification shipments by the end of 2027; in-line EB shipments with HAMR represent 40%, with the goal of increasing to 50% by the end of the year.

Seagate's management pointed out that moving from 3TB/disk to 4TB and 5TB iterations has made the manufacturing process more complex, with the number of heads and disks per drive increasing by 15% to 20% within a year, which is the core logic driving capital investment. On the AI demand side, KV caches in intelligent edge applications are driving the storage of massive contextual data, and physical AI will generate a large amount of unstructured video data—both of which are "still in early stages." On the financial front, the net debt leverage ratio has dropped to 0.4 times, and in the September quarter, $1.2 billion in debt will be repaid, while the pace of share buybacks is accelerating. After-hours stock prices briefly rose by 10%, the market responded with tangible gains to Seagate's endorsement of the sustainability of storage demand.