This Storage Stock Is Now Up More Than 700% in a Year, and the AI Boom Could Push It Even Higher.

Shares of Seagate Technology (NASDAQ: STX) person go 1 of the much astonishing artificial quality (AI) winners successful the market. Hard drives are not arsenic glamorous arsenic graphics processing units (GPUs) oregon unreality software. But information centers inactive request a spot to store the flood of information created by AI applications, and investors person started treating Seagate arsenic a front-line beneficiary of that build-out.

The determination has been extraordinary. The retention banal is much than 700% implicit the past twelvemonth arsenic of this writing, and it jumped astir 9% connected Monday unsocial and is up sharply connected Tuesday morning, too. Even aft a tally similar that, could shares support rising? If AI-driven request keeps outstripping proviso and Seagate continues to grow margins, the banal could inactive person country to run.

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Here's a person look astatine the concern down the move.

AI is turning hard drives into a maturation communicative

Seagate's fiscal 3rd 4th of 2026 (the play ended April 3, 2026) showed conscionable however unthinkable the business's momentum is. Revenue roseate 44% twelvemonth implicit twelvemonth to $3.11 billion, portion non-GAAP (adjusted) gross borderline expanded to 47% from 36.2% successful the year-ago quarter. Adjusted net per stock much than doubled to $4.10.

Additionally, Seagate's adjusted gross borderline has climbed from 40.1% successful fiscal Q1 to 42.2% successful fiscal Q2. It reached 47% successful fiscal Q3. And absorption guided for fiscal fourth-quarter gross of astir $3.45 cardinal astatine the midpoint, implying different crisp increase.

The operator is Seagate's nearline business, which supplies high-capacity drives utilized successful information centers. They store tremendous amounts of information astatine a debased outgo per terabyte.

"Today, AI sits astatine the halfway of astir each lawsuit request conversations," said Seagate CEO Dave Mosley successful the company's fiscal third-quarter net call.

Management said nearline products accounted for adjacent to 90% of full exabyte shipments successful the March quarter. Even more, Seagate said nearline capableness is astir afloat allocated done calendar 2027, supported by proviso agreements with astir each large unreality and hyperscale customers.

That visibility is important -- and it's cardinal to the bull lawsuit for the stock.

After all, retention has historically been cyclical and unpredictable, with proviso and request swinging sharply. But today's request backdrop looks unusual, not conscionable due to the fact that of visibility, but besides due to the fact that Seagate has different main lever beyond portion growth: it is trying to propulsion much capableness into each drive.