Can Seagate’s Decade-High Profit Margin Last?
For questions about this article or underlying research, email help@trefis.com.
After covering the costs of running the business, one large company now keeps about 40 cents of every dollar it sells. That company is Seagate Technology (STX), a maker of mass-capacity data storage. The company’s operating margin over the twelve months to October 2, 2026 is its highest in ten years. So what do you think Seagate usually keeps?
How Unusual Is This For Seagate?
Very unusual. Over the last forty quarter ends, Seagate’s median twelve-month operating margin was 13.2%, against 40.5% over the twelve months to October 2, 2026. The company now keeps about three times what is normal for it. Here is the same twelve-month figure at the same point of each year.
| Twelve months ended | Operating margin |
|---|---|
| 2017-09-29 (Q1 FY2018) | 11.6% |
| 2018-09-28 (Q1 FY2019) | 16.8% |
| 2019-10-04 (Q1 FY2020) | 12.3% |
| 2020-10-02 (Q1 FY2021) | 13.1% |
| 2021-10-01 (Q1 FY2022) | 16.0% |
| 2022-09-30 (Q1 FY2023) | 14.1% |
| 2023-09-29 (Q1 FY2024) | -2.7% |
| 2024-09-27 (Q1 FY2025) | 13.1% |
| 2025-10-03 (Q1 FY2026) | 23.2% |
| 2026-10-02 (Q1 FY2027) | 40.5% |
Twelve months in each row, ending at the same fiscal quarter end in each year, 2017-09-29 (Q1 FY2018) to 2026-10-02 (Q1 FY2027).
Seagate broke its own record of 34.7%, set just one quarter earlier over the twelve months to July 3, 2026. The twelve-month margin has now reached a new high at seven quarter ends in a row. The milestone represents a record Seagate has been extending for seven quarters, rather than a sudden break in performance.
What Is Behind Seagate’s Record Profit Margin?
Management attributes the margin to selling more storage to data centers, at better prices. Data center customers took 90% of the capacity Seagate shipped in its latest quarter, management said on the October 27, 2026 call. Management credited the wider gross margin to pricing and a better product mix as it ramps its Mozaic 4 drives, even as parts it buys from outside cost more than a year ago. Management also said disciplined expense management let more of the stronger demand reach operating profit.
Seagate’s net margin, the share of sales it keeps as profit, is at a ten-year high too, at 31.9% over the twelve months to October 2, 2026. And sales have grown against the same quarter a year earlier for ten quarters in a row.
Is The Latest Quarter Still Improving?
Yes. In the single quarter ended October 2, 2026, Seagate’s operating margin was 48.9%, up from 26.9% in the same quarter a year earlier. That matters because a twelve-month record still counts three older quarters, and a newest quarter can already be turning down while the twelve-month figure keeps climbing. Here the newest quarter sits well above the twelve-month record, so the single quarters are still pushing the record up, not trailing behind it. It was also up from 43.1% in the quarter ended July 3, 2026.
When The Record Is Next Tested
For the December quarter, management expects its own adjusted operating margin to expand towards the mid-50% range, a forecast it gave on the October 27 call. Asked about it on the call, management said that means a margin between 50% and 55%. On that adjusted basis, the quarter ended October 2 was already at 50.7%, above the reported 48.9%. Over the twelve months to November 12, 2026, Seagate stock returned 90.4%, against 12.2% for the S&P 500. Over the last three months, though, the stock fell 44.0%, while the S&P 500 fell 2.2%. Seagate is expected to report in January 2027, and its operating margin for that single quarter, against the quarter ended October 2, is the figure to watch.
What Would Selling Seagate Technology Cost You In Tax?
If you bought long ago, selling can bring a large tax bill, and holding keeps all the risk. A free 30-minute strategy review with our partner advisory firm covers a floor under a large position and a lower-tax way out.
Spot an error or want more like this? Tell us in 10 seconds.