Seagate (STX) Q1 FY2027 Earnings Preview: Can HAMR Finally Boost Margins?

 

Seagate reports fiscal first-quarter 2027 results after the US close on October 27, 2026, which falls in the early hours of October 28 Singapore time, with the conference call at approximately 5:00 a.m. Singapore time. One point of definition first: fiscal Q1 2027 here means the quarter ended October 2, 2026, not any period in calendar 2027.

 

Guidance issued last quarter calls for revenue of $4.1 billion plus or minus $100 million and non-GAAP diluted earnings of $7.30 per share plus or minus $0.20, with that earnings figure excluding an estimated $0.26 per share of share-based compensation. Consensus differs between data providers, with some showing $7.17 and others $7.40, and all three figures sit inside the company's guided range.

 

The real interest comes from the peer comparison. Western Digital has already reported the same calendar quarter with a non-GAAP gross margin of 58.1% and guidance for 60% to 61% next quarter. Seagate's non-GAAP gross margin last quarter, ended July 3, was 52.7%.

 

What makes that contrast odd is which company ships HAMR. Seagate is the one in volume production, while Western Digital's first-generation HAMR drives are slated for volume shipment in the first half of 2027, with its current line resting on ePMR products of up to 40TB. On the evidence so far, HAMR has not given Seagate a gross margin lead over its rival's non-HAMR approach.

 

Tonight's figures will provide the first like-for-like quarter. This article sets out the baseline data, the requirements implied by guidance, and four metrics to check line by line.

 

 

 

The fiscal quarter in question ended October 2, 2026. Fiscal Q1 2027 does not correspond to calendar 2027 and should be labelled accordingly.

 

Guidance calls for $4.1 billion of revenue and $7.30 of EPS, both with ranges. Revenue runs $4.0 billion to $4.2 billion and EPS $7.10 to $7.50, with the latter excluding $0.26 per share of share-based compensation.

 

The threshold for continued margin expansion is 52.7%. That was last quarter's non-GAAP gross margin, a thirteenth consecutive quarter of improvement, with management stating that sequential improvement would continue through fiscal 2027.

 

Western Digital posted 58.1% for the same calendar quarter, 5.4 points higher. But the two figures sit one quarter apart, and Seagate's September-quarter number only arrives tonight.

 

Western Digital's HAMR is not yet in volume production. Its first-generation HAMR drives are planned for volume shipment in the first half of 2027, with current output resting on ePMR products of up to 40TB, expected to account for nearly 30% of nearline shipments in the December quarter.

 

The shares have derated substantially. As of October 22 the stock sat more than 41% below its 52-week high at 17.9 times forward earnings, having fallen 8.52% that day.

 

Supply discipline is the swing variable. Western Digital has stated it will not invest in any incremental unit capacity, while reporting that Toshiba would double its hard drive capacity weighed on storage stocks in October.

 

 

Seagate's fiscal Q1 2027 results come after the US close on October 27, with the conference call following, corresponding to the early hours of October 28 Singapore time and a call at roughly 5:00 a.m.

 

Expectations need to be read across three sources, because they do not agree.

 

 

All three sit inside the guided range, with the differences arising from each provider's sample and methodology. Whether the print counts as a beat or a miss therefore depends on which figure is used as the reference, and citations should specify which.

 

On revenue, guidance is $4.1 billion at the midpoint across a range of $4.0 billion to $4.2 billion. Against last quarter's $3.629 billion, the midpoint implies sequential growth of roughly 13.0%, a figure calculated here.

 

On the record, Seagate has beaten consensus EPS in each of the past four quarters, including by more than 12% in fiscal Q4 2026. Fiscal 2026 revenue grew 34% and adjusted gross margin expanded by 10 percentage points over that year.

 

The share price has detached from those results. As of October 22 the stock traded more than 41% below its 52-week high at 17.9 times forward earnings, having fallen 8.52% that day. The market's concern is not the current quarter but the sustainability of AI infrastructure spending.

 

That pattern recurs across the storage and equipment supply chain. Our earlier piece on what Lam Research's earnings signal for AI memory stocks offers a comparison from the upstream equipment side.

 

 

The following covers fiscal Q4 2026, ended July 3, 2026, as the basis for comparison tonight.

 

 

What the release omitted deserves attention. The fiscal Q4 2026 earnings release gave no exabytes shipped figure, no nearline or mass capacity revenue and exabyte data, and no quantified HAMR metric at all, offering only qualitative references to a "differentiated HAMR technology roadmap" and "HAMR-based Mozaic products." The widely cited figure of roughly 40% HAMR adoption comes from third-party write-ups of the conference call rather than the release itself, a distinction that belongs in any citation.

 

Guidance has gaps too. The company gave ranges for revenue and EPS but provided no non-GAAP gross margin guidance and no operating expense guidance. Tonight's margin figure therefore cannot be measured against a pre-announced target, only against last quarter's 52.7% and management's statement about sequential improvement.

 

That yields the clearest single test tonight: a non-GAAP gross margin above 52.7% extends the run of improvement to a fourteenth consecutive quarter, while a figure at or below 52.7% breaks a thirteen-quarter streak that management had said would continue through fiscal 2027.

 

 

This section carries the article's core point, because what it shows runs against the intuition that leading on HAMR means leading on margins.

 

Western Digital has reported its own fiscal Q1 2027, covering the same calendar quarter.

 

 

The two EPS figures are not comparable, since the companies have different share counts. Gross margin is comparable, and the gap there is 5.4 points.

 

But the basis problem must be stated: Western Digital's 58.1% covers the September quarter while Seagate's 52.7% covers the July quarter, one quarter apart. Seagate's September-quarter margin only arrives tonight, which is precisely why it is the number most worth checking.

 

The technology path makes the point sharper. Western Digital reached 58.1% and guided to 60% to 61% next quarter without HAMR. Its chief executive says first-generation HAMR drives are planned for volume shipment in the first half of 2027, with current output resting on ePMR products of up to 40TB, expected to make up nearly 30% of nearline shipments in the December quarter. Seagate is already shipping HAMR.

 

Western Digital's December-quarter guidance calls for revenue of $5.1 billion plus or minus $100 million, non-GAAP gross margin of 60% to 61%, operating expenses of $400 million to $410 million, and non-GAAP EPS of $5.80 plus or minus $0.20. Taking the 60.5% gross margin midpoint and subtracting the operating expense midpoint as a share of revenue ($405 million over $5.1 billion, or roughly 7.94%) implies a non-GAAP operating margin of roughly 52.6%, a calculation made here. Seagate's non-GAAP operating margin last quarter was 44.6%.

 

So the question of whether HAMR can keep improving margins has only a limited answer from public data. HAMR has clearly supported Seagate's thirteen consecutive quarters of gross margin improvement and the 10 percentage point expansion across fiscal 2026, yet it has not put Seagate's absolute gross margin above a rival running the ePMR path. Tonight's figure will show whether that gap is narrowing, holding or widening.

 

One further pricing datapoint comes from Western Digital's disclosure: its average price per terabyte rose 28% year over year, and its chief financial officer sees further room over the next three to four quarters. Drive pricing is an industry-wide phenomenon, which is a positive read for Seagate, but it also means how much of Seagate's margin improvement came from HAMR's cost structure versus industry-wide price increases cannot be separated from public data. That is a fundamental limit on attributing margin gains to HAMR.

 

For the full breakdown of Western Digital's report, see our earlier analysis of Western Digital's Q1 FY2027 earnings.

 

 

Whether margins keep improving depends on industry supply as well as product mix, and this became the direct trigger for the storage sector's October pullback.

 

Western Digital's chief executive said the company is "committed to not investing in any incremental unit capacity," with growth coming from storing more data on each drive, meaning areal density rather than drive count. If both major manufacturers hold unit capacity flat, the pricing environment stays firm, and that is the structural reason margins have expanded over recent quarters.

 

What breaks that premise is added capacity. Reporting that Toshiba would double its hard drive capacity weighed on the storage sector in October, while analysis notes that the gap between storage supply and demand has widened and that additional capacity is expected this quarter.

 

Those two pieces of information point in opposite directions, and public data cannot settle them. Notably, a decline of more than 41% from the 52-week high reflects concern about supply and the sustainability of AI spending rather than about the current quarter, given that EPS beat in each of the past four quarters.

 

Management's language on capacity investment during tonight's call may therefore matter more to the subsequent trajectory than the quarter's margin figure. Three things to listen for: whether it commits to holding unit capacity flat, how it characterises competitors' capacity plans, and whether it reaffirms the margin improvement path for the remainder of fiscal 2027.

 

 

The most efficient order to work through.

 

First, non-GAAP gross margin against 52.7%. Above it extends the improvement to a fourteenth consecutive quarter, at or below it breaks the streak against management's stated expectation of continued sequential improvement through fiscal 2027. This figure also provides the first comparable reading against Western Digital's 58.1% for the same quarter.

 

Second, revenue against the $4.1 billion guidance midpoint and EPS against the $7.30 midpoint. Note that consensus runs between $7.17 and $7.40, so whether this counts as a beat depends on the reference used, and the EPS guidance excludes $0.26 per share of share-based compensation.

 

Third, whether exabytes shipped and quantified HAMR metrics are disclosed. Neither appeared in last quarter's release, and disclosure this quarter would for the first time make HAMR penetration and Western Digital's 248 EB shipment figure comparable.

 

Fourth, next-quarter guidance and capacity language. Western Digital's December-quarter guidance is $5.1 billion of revenue at a 60% to 61% gross margin. If Seagate's December guidance again omits a margin figure, that gap will remain impossible to compare directly.

 

On MEXC, review the contract rules, leverage tiers and position limits for the Seagate stock perpetual, noting that books typically thin considerably around earnings, so check trading sessions and risk limits before submitting an order.

 

 

For James Mitchell, what matters in this print is not whether Seagate beats, which it has done for four straight quarters, but a widely misread technology narrative.

 

The market's default assumption is that leading on HAMR means leading on margins. The available data does not support that inference. Seagate is already in volume production on HAMR and posted a 52.7% non-GAAP gross margin last quarter. Western Digital's first-generation HAMR will not ship in volume until the first half of 2027, and running on ePMR products of up to 40TB it posted 58.1% for the same calendar quarter with guidance for 60% to 61% next quarter. On my own arithmetic, Western Digital's December guidance implies a roughly 52.6% operating margin against Seagate's actual 44.6% last quarter.

 

I want to stress the basis limitation: those two gross margins sit one quarter apart, and Seagate's September figure only arrives tonight. So it cannot yet be asserted that Seagate is behind, only that the public data to date shows no absolute gross margin advantage from HAMR. Tonight produces the first genuinely comparable reading, and that is the number I consider most worth waiting for.

 

There is also a fundamental attribution difficulty. Western Digital disclosed that its average price per terabyte rose 28% year over year, with its CFO seeing further room over the next three to four quarters. Drive pricing moves industry-wide, which means that within Seagate's thirteen consecutive quarters of margin improvement, how much came from HAMR's cost structure and how much from sector-wide price increases cannot be separated from public data. Any analysis crediting the margin expansion entirely to HAMR has skipped that step. Verifying HAMR's contribution properly would require unit costs or margins split by technology path, and neither company discloses at that granularity.

 

More predictive, in my view, is supply discipline. Western Digital's chief executive stated plainly that the company is committed to not investing in any incremental unit capacity, growing through areal density rather than drive count. If both majors do that, the pricing environment holds, and that is the structural reason margins have expanded. Reporting that Toshiba would double capacity suppressed the whole sector in October precisely because it threatens that premise. So Seagate's language on capacity investment tonight may matter more over the coming quarters than the margin figure itself.

 

A closing word on the share price. As of October 22 this stock sat more than 41% below its 52-week high at 17.9 times forward earnings, having fallen 8.52% that day, against a record of EPS beats in each of the past four quarters, fiscal 2026 revenue growth of 34% and a 10 percentage point expansion in adjusted gross margin. That combination says the market is pricing the durability of AI infrastructure spending and supply-side discipline rather than the current quarter. We have seen the same pattern in SoFi and Lam Research: strong numbers, falling stocks. In that environment a beat alone does not change the trajectory, and what does is guidance and management's characterisation of capacity and demand durability.

 

 

 

After the US close on October 27, 2026, for fiscal first-quarter 2027, with the conference call following, corresponding to the early hours of October 28 Singapore time and a call at roughly 5:00 a.m. Note the fiscal convention: fiscal Q1 2027 means the quarter ended October 2, 2026, and does not correspond to any period in calendar 2027.

 

 

Company guidance calls for revenue of $4.1 billion plus or minus $100 million and non-GAAP diluted EPS of $7.30 plus or minus $0.20, with the latter excluding $0.26 per share of share-based compensation. Consensus differs between providers, with one showing $7.17, implying roughly 185.7% year-over-year growth, and another $7.40, both inside the guided range. Any judgement about a beat therefore needs to specify which reference is used.

 

 

Anything above last quarter's 52.7% on a non-GAAP basis. That quarter marked a thirteenth consecutive quarter of margin improvement, and management had said sequential improvement would continue through fiscal 2027. Note that the company gave no margin guidance for this quarter, so the only available references are last quarter's actual figure and management's stated expectation rather than a pre-announced target.

 

 

Public data shows the two are not moving together. Seagate is already in volume production on HAMR and posted a 52.7% non-GAAP gross margin last quarter, while Western Digital's first-generation HAMR will not ship in volume until the first half of 2027 and, running on ePMR products of up to 40TB, posted 58.1% for the same calendar quarter with guidance for 60% to 61%. But the two figures sit one quarter apart and Seagate's September number only arrives tonight, so the position is that public data shows no absolute margin advantage from HAMR rather than that Seagate is behind.

 

 

Gross margin and operating margin are comparable while EPS is not, since the two have different share counts. Quarters must also be aligned, as Western Digital's reported 58.1% covers the September quarter while Seagate's 52.7% covers the July quarter. Note additionally that only Western Digital discloses exabytes shipped, at 248 EB and up 22% year over year, while Seagate's last release omitted the metric, so shipments cannot currently be compared.

 

 

Seagate's fiscal Q4 2026 earnings release gave no quantified HAMR metric at all, offering only qualitative references to a differentiated HAMR technology roadmap and HAMR-based Mozaic products. The figure of roughly 40% penetration comes from third-party write-ups of the conference call rather than the release. Should this quarter's release begin disclosing the metric, that would be valuable new information.

 

 

Western Digital's chief executive said the company is committed to not investing in any incremental unit capacity, growing through areal density instead. But reporting that Toshiba would double its hard drive capacity weighed on the storage sector in October, while analysis notes the storage supply and demand gap has widened with additional capacity expected this quarter. Supply discipline is the structural precondition for recent margin expansion, so management's language on capacity investment during the call is worth attention.

 

 

As of October 22, 2026, the shares sat more than 41% below the 52-week high at 17.9 times forward earnings, having fallen 8.52% that day. Over the same stretch the company beat consensus EPS in each of the past four quarters, grew fiscal 2026 revenue 34% and expanded adjusted gross margin by 10 percentage points. That combination indicates the market is pricing the sustainability of AI infrastructure spending and supply-side discipline rather than current quarterly results.

 

 

The information above is provided for general market and product information only and does not constitute investment advice, financial advice, legal advice, tax advice or a recommendation to buy or sell securities, nor does it constitute an endorsement of any issuer or trading product. This article is a preview written before the earnings release, verified before 18:00 Singapore time on October 27, 2026, at which point Seagate's fiscal first-quarter 2027 results had not been published; all figures herein are previously published historical financial data, company guidance or third-party consensus estimates, and none constitutes a forecast of actual results. The fiscal period discussed is the quarter ended October 2, 2026 and does not correspond to calendar 2027, a distinction readers should maintain. Consensus estimates, price targets and ratings come from third parties and may change at any time, different providers give differing consensus figures and this article lists several, which should not be mixed. Figures identified as this article's calculations, including sequential growth rates and Western Digital's implied operating margin, are not figures disclosed by either company and actual outcomes may differ. The two companies' gross margin figures cover different quarters and do not constitute a like-for-like comparison until Seagate reports, and earnings per share cannot be compared across companies given different share counts. The company did not disclose exabytes shipped or any quantified HAMR metric in its earnings release, and the penetration figure referenced here comes from third-party write-ups of a conference call rather than the release. Non-GAAP gross margin, operating income and earnings per share are non-GAAP measures defined by the company, with EPS guidance excluding share-based compensation, and are not directly comparable with other companies. Some industry capacity and pricing information comes from media reports rather than company disclosure, and supply and demand conditions can change rapidly. The stock perpetual contract referenced is a derivative rather than a share, conferring no ownership, voting rights or dividends, and leveraged products can produce losses exceeding the initial outlay, with order books typically thinning and volatility rising around earnings. Readers should consult the company's original filings before making any decision, judge against their own financial circumstances, investment objectives and risk tolerance, and consult a qualified professional where appropriate. The MEXC Crypto Pulse team accepts no liability for any direct or indirect loss arising from the use of this information.

 

 

James Mitchell specializes in technical analysis, market trends, and trading strategies for both Bitcoin and altcoins. Based in London, he has over 10 years of experience in financial markets. Before joining MEXC Learn, James worked as a senior analyst at a leading European investment firm, where he developed expertise in risk management and quantitative trading. His transition to cryptocurrency markets began in 2017, and he has since become recognized for his data-driven approach. He holds a Master's degree in Financial Economics from the London School of Economics. His analytical approach combines traditional technical analysis with on-chain metrics to provide readers with actionable insights.

 

Areas of Expertise: Technical Analysis, Market Trends and Cycles, Trading Strategies, Bitcoin and Altcoin Analysis, Risk Management.

 

 

 

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