Nvidia (NVDA -3.65%) and Broadcom (AVGO -3.67%) may be top of mind when it comes to investing in artificial intelligence (AI), but the boom extends well beyond chips. Seagate Technology (STX -4.24%) is taking a different route, supplying the high-capacity storage needed to support the AI data center build-out.
With demand for storage only set to rise, this overlooked AI stock could be the one to watch in 2027. To see why, it helps to start with how much storage AI actually needs.
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The AI storage boom is already showing up in Seagate's business
Every AI model needs enormous amounts of data to train and serve users. As companies generate more data and build more complex AI applications, they also need affordable ways to store that information at scale.
That's where Seagate comes in. The company specializes in high-capacity hard disk drives (HDDs), which are essential to modern data centers. While solid-state drives (SSDs) are valuable for workloads that need fast access, HDDs offer high storage capacity at a lower cost.
Plus, the opportunity is enormous, since AI infrastructure spending doesn't stop at compute power. It also creates huge demand for storage systems to preserve, manage, and retrieve data.
Seagate's latest results suggest that this demand is already driving much of its business growth. In fiscal 2026 ended July 3, the company reported $12.2 billion in revenue, up 34% year over year, driven by stronger data center demand.
What makes the trend even more interesting is the growing importance of large cloud providers. These companies need vast storage capacity to support AI development, cloud computing, enterprise applications, and digital services. Indeed, Seagate reported that demand for its HDDs has strengthened as customers invest aggressively in data center infrastructure.
Seagate also disclosed that its nearline hard drive supply has been mostly allocated through 2027. That means most of the high-capacity drives it can build for data centers during that period are already spoken for. On top of that, strategic planning discussions extend into 2028 and beyond. These longer planning horizons give the company greater visibility into demand and help it align production with its customers' needs.
But if the AI build-out continues during the coming years, the next question is whether Seagate can provide even more storage capacity. That brings its technology roadmap into focus.
Seagate's Mozaic technology could be its biggest competitive advantage
One of the most interesting parts of Seagate's bull case is its investment in heat-assisted magnetic recording (HAMR). This technology allows hard drives to store more data in the same physical space, helping data center operators add capacity without expanding their footprint.
Seagate's Mozaic platform is central to this strategy. The company announced that its next-generation Mozaic 4+ drives, which offer capacities of up to 44 terabytes, had entered production with two leading cloud providers. That shows Seagate is moving its technology beyond development and toward commercialization.
NASDAQ: STX
Key Data Points
These higher-capacity drives can help cloud providers store more information within existing infrastructure, potentially improving their economics even as data requirements grow. For Seagate, that's a win too, since selling more of these advanced drives could boost margins and strengthen profitability.
But the roadmap extends beyond the current generation. Seagate says Mozaic 5+ is progressing toward qualification shipments in late 2027, which means customers could start testing the next-generation drives before buying them at scale. That gives investors another huge technology milestone to watch as the AI build-out continues.
These days, as AI applications become more sophisticated, companies are building larger training data sets, retaining more information, and creating backup copies of valuable data. Seagate highlighted these trends as factors supporting long-term demand for its products.
Is Seagate stock a buy heading into 2027?
With that much working in its favor, investors may be wondering whether Seagate deserves a spot in their portfolios. Nvidia and Broadcom may dominate the headlines, but Seagate offers a different way to invest in the AI boom. As AI fuels demand for more storage, Seagate's high-capacity drives and Mozaic platform could help it remain a key beneficiary into 2027.
Looking ahead, investors can track the Mozaic 4+ rollout, nearline supply allocations, and Mozaic 5+ qualification shipments in late 2027. If those milestones stay on track, Seagate could become one of the most promising under-the-radar winners of the AI race.
