STX - Seagate's Winning Strategy: HAMR Technology Growing Margins And Upcoming Demand Cycle

2024-04-22 12:34:17 ET

Summary

• Seagate's Mozaic platform and HAMR technology are expected to boost revenues and increase operating margins.
• The periodic replacement or upgrading of existing storage units will contribute to Seagate's sales growth.
• Seagate's gross margin is projected to return to sustainable levels, leading to a higher valuation.

Thesis

Seagate Technology Holdings plc (STX) is at the forefront of the market for solving mass-capacity storage problems. With breakthrough technologies, its product portfolio consists of storage devices, systems, and services from edge to cloud for OEMs, distributors, retailers, and institutions. As of 04/12/24, STX's stock price was $85.19. Recently, Seagate provided forward guidance stating that its new Mozaic platform will undergo volume scaling. In response, I believe its Mozaic platform will strengthen and grow Seagate's position in the mass capacity storage industry, which will boost revenues. Furthermore, I believe Seagate's revenues will increase due to a refresh in its business cycle as companies replace or upgrade their storage systems. Ultimately, this cycle refresh will signify Seagate and its customers are overcoming economic constraints that occurred during the pandemic and a higher interest rate environment....

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