Seagate Technology Holdings PLC (NASDAQ:STX) Chief Financial Officer Gianluca Romano said the supply-demand gap for data storage is widening as cloud storage demand grows faster than the company expected, during its first-quarter earnings call.
stated that the shortfall between data storage supply and market demand is expanding due to faster-than-expected cloud consumption, during its first-quarter earnings call.
The Growing Storage Deficit
During the company’s first-quarter fiscal 2027 earnings call, Romano told analysts that storage demand across various cloud segments is increasing at a rate that has exceeded the company’s internal projections.
“We are seeing demand for storage in the different part of the cloud growing very rapidly, even a little bit faster than what we were expecting,” Romano said. “So as we were discussing before, our demand is stronger and stronger, I would say supply-demand gap is probably growing at this point.”
To address this demand, Romano stated the company is focusing on technology transitions and will ramp up production of its 40-terabyte drives over the coming quarters.
“Absolutely everything we can make above and beyond our plans is being spoken for,” said Seagate CEO Dave Mosley.
AI Agents Accelerating Demand
Mosley attributed a portion of this long-term demand visibility to a shift in artificial intelligence workloads. Mosley noted that as AI adoption moves past the initial model training phase and into inference and agentic applications, the need for persistent data storage increases.
“Estimates suggest that billions of AI agents will be deployed worldwide over the next decade, executing hundreds of billions of actions daily,” Mosley said. “We believe future storage demand will increasingly be tied to this new data life cycle and compound again as physical AI applications proliferate.”
Mosley stated that these dynamics highlight the role of hard drives, which he called the “scalable, reliable and cost-efficient foundation for data retention.”
Record Capacity Shipments
This demand environment drove Seagate’s first-quarter revenue to $4.2 billion, a 61% increase year-over-year, Romano reported. Data center revenue reached $3.4 billion, representing 81% of total quarterly revenue, according to Romano.
To secure future capacity, Mosley reported that the vast majority of the company’s nearline exabyte supply is currently allocated under long-term agreements through calendar 2028, with certain cloud customer agreements extending through 2030.
How Has STX Performed in 2026?
The stock was higher by 189.97% over the last year, up 142.51% year-to-date, and lower by 27.16% over the last month. The stock closed up 3.67% at $667.85 on Tuesday.
Benzinga’s Edge Stock Rankings indicate that STX maintains a positive price trend in the long term but a negative trend in the short and medium terms, with a good growth score.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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