Seagate Beats Estimates and Guides Far Higher, Yet Shares Slide After Hours

Seagate posted adjusted earnings of $7.68 a share for its fiscal first quarter, beating estimates, and guided the next quarter far above forecasts.

Seagate Technology reported fiscal first-quarter 2027 results on Oct. 27, 2026. The quarter ended Oct. 2, 2026.

Revenue was $4.233 billion, up 61% from $2.629 billion a year earlier. That growth rate is a TickerGrove calculation from the reported figures.

Adjusted earnings are the company's non-GAAP measures. Non-GAAP means figures adjusted outside standard accounting rules.

The quarter set records for profit and cash

Adjusted earnings were $7.68 a share, up from $2.61 a year earlier. Analysts polled by FactSet expected adjusted earnings of $7.45 a share.

Seagate beat that tally by $0.23 a share, a TickerGrove calculation. The same tally expected sales of $4.15 billion, which Seagate also cleared.

"Seagate delivered another quarter of record profitability and our highest ever free cash flow in the September quarter," Chief Executive Dave Mosley said.

Operating cash flow was $1.7 billion in the quarter. Free cash flow was $1.5 billion.

Reported net income was $1.761 billion, up from $549 million a year earlier. Reported diluted earnings were $7.59 a share, up from $2.43.

Margins expanded sharply as sales surged

Reported gross margin was 57.3%, up from 39.4% a year earlier. Adjusted gross margin was 57.8%, up from 40.1%.

Adjusted operating margin was 50.7%, up from 29.0% a year earlier. About half of each sales dollar became operating profit on that basis.

Mosley said data creation, retention and reuse continue to compound storage demand. He described long-term customer demand visibility and a multi-year growth phase.

He pointed to the company's HAMR-based technology roadmap. HAMR is heat-assisted magnetic recording, a way to store more data on each disk.

Seagate retired about $1.2 billion of debt in the quarter. Gross debt fell to $2.4 billion, then to $1.6 billion after a further retirement.

The company returned $568 million to shareholders through dividends and buybacks. It raised its quarterly dividend by about 3%, to $0.76 a share.

Guidance for the December quarter tops forecasts

For the fiscal second quarter, Seagate guided revenue to $4.8 billion, plus or minus $100 million. It guided adjusted earnings to $9.20 a share, plus or minus $0.20.

Investor's Business Daily put prior analyst forecasts for the quarter's sales at $4.55 billion. The guidance midpoint sits about 5.5% above that, a TickerGrove calculation.

The outlook is company guidance, not a result. The adjusted earnings guide excludes estimated share-based compensation of $0.30 a share.

Shares fell despite the beat

Shares fell more than 8% to $610 in after-hours trading, Investor's Business Daily reported. That followed a 3.7% gain in the regular session on Tuesday.

The slide came even though results and guidance both beat forecasts. IBD noted investor concern about how long AI buildout spending lasts.

Seagate and Western Digital dominate the hard-disk drive market. Those drives are a key part of cloud data centers behind the AI buildout.

What remains unknown

What remains unknown is why investors sold a beat this large, because the release gives no reason for the after-hours move. Also unknown is whether demand visibility converts into the guided December quarter at these margins. What to watch is December-quarter results against the $4.8 billion guide, any update on HAMR shipments, and whether gross debt stays near $1.6 billion. The verified record is clear on the quarter itself: sales surged, margins widened sharply, and guidance rose well above forecasts.