Seagate Technology Holdings Inc. Chief Financial Officer Gianluca Romano said at Citi's 2026 Global TMT Conference on September 9 that the company is in the middle of a multi-year upcycle, not the beginning of one, with revenue and profitability improving for more than three years.
Demand for storage continues to run ahead of supply, and the gap is widening rather than narrowing, Romano said. Seagate is targeting at least a 25% compound annual growth rate in exabyte capacity over the next two to three years without increasing unit shipments, driven by shifting toward higher-capacity drives.
Long-term agreements extend two to three years into the future, and purchase orders provide four to five quarters of visibility with volumes rising year over year, he added.
Seagate is transitioning its Heat-Assisted Magnetic Recording (HAMR) product line from 30-terabyte drives to 40-terabyte units — a 33% capacity increase — before moving to 50-terabyte drives that would add another 25%. A 50-TB drive is expected to begin customer qualification in approximately four quarters. Second-generation HAMR drives are already in production and ramping well, while third-generation HAMR is expected to start within a few quarters.
Perpendicular Magnetic Recording (PMR) drives continue to serve the lower end of the capacity spectrum, ranging from 2 TB to 28 TB. Manufacturing is kept in-house, including heads and media, which helps manage cost per terabyte.
Demand spans public cloud, enterprise OEMs, and on-premises data centers, with emerging applications in video AI, robotic automation, autonomous vehicles, and physical AI, according to the conference remarks.
Public cloud customers are buying the highest-capacity drives, such as the 40 TB models, while on-premises data centers currently consume lower-capacity 28 TB to 30 TB drives — though those are projected to transition to 40 TB drives over the next two years.
On the financial side, free cash flow topped $1.1 billion in the June quarter. Operating expenses are projected to remain stable near $300 million per quarter for the next three to four quarters, with no headcount growth planned. Capital expenditures are being maintained within a disciplined range of 4% to 6% of revenue.
Net leverage remains well below target levels. Most planned debt reduction is complete, though one high-interest note remains that may be repaid next quarter. Management expects debt reduction to be largely finished within one to two quarters, after which share buybacks will increase while maintaining dividend payments. Seagate has maintained dividend payouts for 16 consecutive years.
