Seagate Technology (STX) has been on a remarkable run, with its stock surging nearly more than 46% over the past month. This rally reflects growing investor confidence driven by the company’s improving financial performance and a favorable industry backdrop.

In its recently announced fiscal third-quarter 2025 results, Seagate reported a solid 31% increase in revenue compared to last year. Even more impressive was the 81% year-over-year growth in adjusted gross profit dollars.

A key driver behind Seagate’s robust performance has been its financial leverage, which continues to strengthen its profit margins. The company has now expanded its gross margins for eight consecutive quarters. These gains have translated into solid adjusted earnings per share (EPS) and bolstered its free cash flow generation.

Market dynamics are also favoring Seagate. With a “healthy” supply-demand balance in the mass capacity storage segment, the company can sustain its growth trajectory. This positive backdrop has prompted Wedbush analyst Matt Bryson to set a bullish price target of $140 for STX stock, the highest target among analysts covering the stock.

As Seagate continues to deliver on profitability and capitalize on favorable industry trends, STX stock has the potential to grow further.

Seagate: Positioned for Solid Growth in the AI and Cloud Era

Seagate is poised to deliver impressive growth, driven by a favorable demand and supply environment for mass capacity storage. Its focus on improving the supply chain, strategic pricing actions, and a build-to-order strategy that offers visibility into customer needs positions it well to deliver profitable growth.

Despite potential trade headwinds, Seagate’s focus on supply chain adjustments is minimizing tariff impacts. Thanks to strategic geographic diversification in its manufacturing processes, management sees little disruption to its near-term financial performance.

Seagate’s product roadmap remains strong, which will drive future growth. A key growth catalyst is Seagate’s HAMR (Heat-Assisted Magnetic Recording) based Mozaic drives. These are the only 3-terabyte-per-disk products in the industry, a significant technological edge. Seagate is already ramping production for qualified customers and is on track to expand shipments to a broader range of cloud clients in the second half of 2025.

Moreover, the explosion of video content and the rise of generative artificial intelligence applications are creating new tailwinds for storage demand. Seagate’s solutions are well-suited for these use cases, including storing training data and generated content.

Beyond the large hyperscale players, Seagate is also witnessing increased demand from edge data centers and private clouds, further expanding Seagate’s market opportunity.

Seagate’s visibility into customer demand extends well into 2026, thanks to ongoing negotiations for new build-to-order agreements. Seagate’s ability to meet this demand is evident in the ramp-up of its 24TB and 28TB PMR (Perpendicular Magnetic Recording) platforms. Exabyte shipments for these products surged roughly 60% quarter-over-quarter. Simultaneously, the company is scaling up HAMR-based products as these products gain traction and will likely see a significant increase in shipments.

Besides higher demand, Seagate is also strengthening its balance sheet through debt repayments, which positions it well to capitalize on growth opportunities.

Positive Outlook for the June Quarter

Seagate projects revenue around $2.4 billion for the June quarter, reflecting an 11% sequential and 27% year-over-year increase. Adjusted operating margins are expected to rise into the mid-20% range, while adjusted EPS is forecast at $2.40, up significantly from $1.05 a year ago.

Seagate has continued to see robust demand for its high-capacity nearline products across the global cloud customer base. Moreover, it will benefit from a favorable product mix, including increased adoption of its latest generation products and ongoing pricing adjustments. These factors will support the hard drive business's adjusted gross margin.

Conclusion: Is $140 Within Reach?

Analysts on Wall Street maintain a “Moderate Buy” consensus on Seagate’s stock. The company is well-positioned to capitalize on the growing demand for data storage, driven further by the rise of generative AI applications. This expanding market opportunity and Seagate’s improving margins support a positive outlook for the stock.

Given these tailwinds, Seagate’s growth story appears compelling. With solid fundamentals and market dynamics working in its favor, the $140 price target is starting to look more achievable.