Seagate Technology (STX) shares are extending gains on April 6 after Morgan Stanley said the data storage giant has replaced peer Western Digital (WDC) as its "top pick."
Analyst Eric Woodring reiterated his “Overweight” rating on STX and raised his price target to $582, signaling potential for another 28% rally from current levels.
Woodring’s bullish call is particularly significant given Seagate stock has already rallied more than 50% year-to-date.
The Bull Case for Seagate Stock
Eric Woodring is fully convinced that investors are underestimating the “fundamental strength” of the HDD market.
In his research report, he recommended owning STX shares as they remain one of the most levered picks-and-shovels plays for artificial intelligence (AI) data center spending.
Morgan Stanley’s supply-and-demand tracker now implies persistent shortages, which have pushed the price per terabyte significantly higher than previous estimates.
With hyperscalers reportedly negotiating prices nearly 30% higher than current street estimates for 2027, the investment firm believes Seagate will see margin expansion and earnings growth that far outpaces the consensus.
STX Shares Aren’t Expensive to Own
Beyond analyst upgrades, Seagate shares are poised to gain massive institutional traction via specialized vehicles like the new Roundhill Memory ETF (DRAM).
STX holds a substantial 4.49% weightage in that fund, which would mean a steady floor of passive buying pressure for the multinational as investors flock to the memory and storage theme.
Fundamentally, its technological lead in Heat-Assisted Magnetic Recording (HAMR) is a massive tailwind, allowing for higher-capacity drives that cloud providers desperately need to house AI models.
It's also worth mentioning that STX is currently trading at a forward price-to-earnings (P/E) multiple of less than 36x, which isn’t that expensive for a company riding the artificial intelligence wave.
Seagate Remains a Wall Street Darling
The aforementioned positives are helping keep Wall Street analysts bullish on Seagate Technology Holdings Plc for the next 12 months.
According to Barchart, the consensus rating on STX stock is a “Strong Buy” currently, with price targets as high as $700, suggesting it could rally more than 55% through the remainder of 2026.
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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