Could Seagate Fall 60% Again?

Question: How would you react if you held Seagate (NASDAQ: STX) and its value dropped 60% or more in the coming months?

That may sound dramatic, but it’s not unprecedented. Seagate stock has seen such steep declines before, and given its current valuation, history could repeat itself.

So far in 2025, Seagate has delivered a remarkable 65% year-to-date return, easily outpacing the S&P 500’s 5% gain. This surge has been fueled by structural improvements in the business and a well-timed pivot toward next-gen technologies like HAMR (Heat Assisted Magnetic Recording). Seagate is benefiting from a rebound in the data-storage market, with a significant tailwind from the growing demand for generative AI and cloud infrastructure.

But behind the AI optimism and execution gains lies a more cautionary tale. Separately see, What’s Next For Nike Stock?

Here’s the point: The key takeaway is that during a downturn, Seagate stock might incur meaningful losses. Data from 2020 indicate that STX stock lost approximately 35% of its value in just a few quarters, while also experiencing a peak-to-trough decline of around 58% during the 2022 inflation shock, performing significantly worse than the S&P 500. This raises the question: Could the stock see a sell-off and reach as low as $85 if a similar situation were to unfold? Naturally, individual stocks are generally more volatile than diversified portfolios. Therefore, if you are looking for growth with reduced volatility, you might consider the High-Quality portfolio, which has outperformed the S&P 500 and generated returns of over 91% since its inception.

Image by K. Mishina from Pixabay

Why Is It Relevant Now?

Seagate makes high-capacity HDDs (hard disk drives)—critical infrastructure for storing the massive datasets required to train and deploy large language models (LLMs). While SSDs (solid-state drives) dominate fast-access storage, HDDs still rule cold storage and hyperscale cloud archives—key use cases for companies like Microsoft, Meta, and Amazon.

Seagate launched its Mozaic 3+ platform last year, enabling 3 TB per platter via HAMR technology and integrating it into its Exos 30 TB+ drives, which began shipping to hyperscale cloud customers. At its June 2025 investor conference, Seagate confirmed that engineering samples of 40 TB HAMR drives (10×4 TB platters) have already shipped, with mass production expected in the first half of FY 2026. The company plans to roll out Mozaic 4+ with 40 TB+ capacity in 2026, followed by Mozaic 5+ delivering 50 TB+ drives by 2028, and is targeting 100 TB HDDs by 2030 as part of its broader HAMR roadmap. While this technological leap positions Seagate for long-term growth, it also brings execution risk if demand fails to scale as projected.

Seagate projects Q4 adjusted EPS (June fiscal year) between $2.20 and $2.60, on revenue of $2.25–$2.55 billion. Consensus forecasts 38% revenue growth in FY 2025 and 13% in FY 2026. But even solid growth projections don’t immunize the stock from macro shocks, valuation compression, or execution hiccups. With minimal margin for error, any stumble could trigger a sharp correction.

How resilient is STX stock during a downturn?

STX stock has fared worse than the benchmark S&P 500 index during some of the recent downturns. While investors have their fingers crossed for a soft landing by the U.S. economy, how bad can things get if there is another recession? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.

Inflation Shock (2022)

• STX stock fell 58.2% from a high of $116.02 on 4 January 2022 to $48.49 on 3 November 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 27 May 2025
• Since then, the stock has increased to a high of $141.44 on 29 June 2025

Covid Pandemic (2020)

• STX stock fell 35.6% from a high of $63.23 on 24 January 2020 to $40.73 on 20 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 4 December 2020

Global Financial Crisis (2008)

• STX stock fell 89.1% from a high of $28.60 on 2 November 2007 to $3.11 on 23 January 2009, vs. a peak-to-trough decline of 56.8% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 18 April 2012

Valuation

Seagate currently trades at 18x consensus 2025 earnings, well above its three-year average of just 5x. Its price-to-sales ratio has ballooned to 3x, up from 1.2x in FY 2022. Even its forward P/S of 3x exceeds the three-year average of 2.8x. Compare that to Western Digital (NASDAQ: WDC), a direct peer that typically trades around 1x P/S during market downturns. Investor confidence is clearly embedded in the stock’s premium valuation—but the higher the altitude, the steeper the potential drop. The average analyst price target of $125 implies an 11% downside, even without a market correction.

Given the broader economic uncertainties, ask yourself the question: Do you intend to hold on to your Seagate stock now, or will you panic and sell if it begins dropping to $100, $90, or even lower? Holding onto a declining stock is never easy. Trefis collaborates with Empirical Asset Management—a Boston area wealth manager—whose asset allocation strategies yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Empirical has incorporated the Trefis HQ Portfolio into its asset allocation framework to provide clients with better returns and less risk compared to the benchmark index—a less turbulent ride, as shown in HQ Portfolio performance metrics.

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