Shares of Seagate Technology (STX 1.01%) leaped on Wednesday after the hard drive maker reported sizzling sales and profit growth.
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Business is booming
Seagate's revenue jumped 44% year over year to $3.1 billion in its fiscal third quarter, which ended on April 3.
The rapid build-out of artificial intelligence (AI) infrastructure is creating an urgent need for effective data storage solutions. With demand for its high-capacity hard drives outpacing supply, Seagate has been able to raise prices. That's helped to drive its profit margins sharply higher.
Seagate's adjusted gross margin improved by more than 10 percentage points to 47%, while its operating margin leaped 14 percentage points to 37.5%.
NASDAQ: STX
Key Data Points
All told, Seagate's adjusted net income soared 129% to $934 million, or $4.10 per share.
The data storage leader also generated $953 million in free cash flow, which enabled Seagate to pay off $641 million in debt.
Management sees more AI-driven gains ahead
Seagate expects revenue of roughly $3.45 billion and adjusted earnings per share of $5.00 in its fiscal fourth quarter. Both figures were well above Wall Street's estimates.
"We believe Seagate is entering a new era of structural growth as AI applications amplify data creation and support sustained storage demand," CEO Dave Mosley said.
