Seagate’s Impressive Comeback Story
Seagate Technology (STX) has been on a remarkable journey, with its stock price surging by a staggering 441% over the past year. This impressive comeback has earned the company a spot among the top year-to-date performers in the S&P 500, ranking fourth according to Slickcharts.
However, in a recent post on X (formerly Twitter), renowned stock expert Jim Cramer cautioned investors about the potential risks of holding onto Seagate stock. Cramer, known for his astute market analysis, suggested that investors consider trimming their positions in Seagate, especially those who are light on cash.
What’s Driving Seagate’s Comeback?
Seagate’s remarkable turnaround is largely attributed to its strategic positioning in the rapidly growing AI infrastructure market. As large language models continue to generate enormous amounts of data, the demand for cost-efficient mass-capacity storage solutions has increased exponentially. Hard disk drives, particularly those utilizing Seagate’s proprietary HAMR technology, have emerged as the most viable solution for hyperscalers.
The company’s Mozaic 3 platform has achieved full qualification across all planned cloud service providers, while Mozaic 4 has already secured two customer qualifications. These milestones have validated the structural shift in Seagate’s business, positioning the company for sustained growth in the AI storage market.
Key Financial Metrics to Watch
Seagate’s Q3 fiscal 2026 financial results were nothing short of impressive, with revenue reaching $3.11 billion, non-GAAP gross margin at 47%, and non-GAAP diluted EPS of $4.10. The company’s free cash flow of $953 million further underscored its strong financial position.
Looking ahead to its Q4 fiscal 2026 earnings, Seagate has guided revenue of $3.45 billion, plus or minus $100 million, with non-GAAP diluted EPS of $5.00. Zacks also expects Seagate to report earnings of $5.10 per share, reflecting a 97% year-over-year increase.
Why Trimming Makes Sense
Cramer’s suggestion to trim Seagate stock is not a bearish call on the business, but rather a sound portfolio management strategy. Investors who have accumulated STX below $400 or even below $300, sitting on 3-digit percentage gains, have earned the right to take some profits before the July 28 earnings event.
For investors who bought more recently and have a smaller gain, the calculus is different. The structural AI storage thesis has not changed, and Seagate’s balance sheet is healthier than it has been in years. The demand environment remains intact as well.
Ultimately, the question Cramer is posing is how much of your portfolio is Seagate right now? If the answer is a lot, trimming before July 28 is prudent. If it is a modest position, the risk of cutting early may outweigh the benefit of the insurance.
