Seagate Stock beats 99% of S&P 500 in 2026

In the first two months of 2026, Seagate Technology (NASDAQ:STX) has been making waves in the market with a remarkable surge of 56.6% year-to-date through February 12. This performance easily outshines the S&P 500 during the same period. What’s truly noteworthy is that Seagate is ranked 5th among all S&P500 companies, outperforming 99% of other large-cap stocks in the current year. Moreover, this impressive rally is not a sudden spike but rather an extension of a staggering 335% climb over the past year, signifying a significant transformation from a cyclical storage play to an AI infrastructure powerhouse.

Key to fueling this exceptional rally was Seagate’s January 27 earnings report, which surpassed expectations on multiple fronts. With revenue hitting $2.83 billion as opposed to estimates of $2.76 billion, the company achieved a robust 21.7% year-over-year growth. Furthermore, a non-GAAP EPS of $3.11 exceeded the consensus by 9.5%, marking the eighth consecutive quarter of surpassing earnings expectations since the successful turnaround in 2023.

The standout performance for Seagate this quarter lied in its margins, with a record-breaking 42.2% gross margin and 31.9% operating margin. Notably, free cash flow saw a substantial 305% year-over-year jump to $607 million. CEO Dave Mosley aptly summarized the results by highlighting Seagate’s achievements in gross margin, operating margin, and non-GAAP EPS, setting new records on all fronts.

What truly sets this rally apart is the significant shift in Seagate’s business model towards AI-driven storage solutions. The company’s HAMR-based Mozaic products have gained qualification with five major cloud customers, positioning Seagate to capture the burgeoning demand for AI-driven storage at a large scale. CEO Mosley emphasized the importance of performance and cost efficiency in exabyte-scale storage solutions, recognizing the growing significance of AI applications in enhancing data creation and economic value.

Looking ahead, Seagate’s management projects continued growth with Q3 guidance forecasting $2.90 billion in revenue and $3.47 EPS. Analysts are also optimistic about Seagate’s future, with a consensus price target of $467.67, reflecting an 8% potential upside. With 19 buy or strong buy ratings against just one sell, the analyst community is overwhelmingly bullish on Seagate’s prospects.

The current valuation of Seagate indicates the market’s confidence in the company’s growth potential. Trading at 33x forward earnings with a PEG ratio of 0.91, Seagate’s valuation acknowledges the belief that earnings growth can support the current multiple. Comparatively, Seagate’s peer, Western Digital (NASDAQ:WDC), has also seen a solid 64.9% climb year-to-date, underscoring the overall positive trend in the storage sector. However, Seagate’s stronger execution, higher margins, and technological differentiation through HAMR give it a competitive edge in the market. If the AI infrastructure spending trend continues, Seagate’s promising start could mark just the beginning of a prolonged growth cycle.