Seagate Technology Holdings PLC Ordinary Shares (Ireland) Citi’s 2026 Global TMT Conference

Good morning. I've been told it's still the morning.

It is. I've since stepped out, so I'm assuming it's still morning of day two.

We've had a lot of meetings, and I can't believe, like I said, it's still the morning. Welcome to day two. Asiya Merchant. I lead Citi's tech hardware and tech research here at Citi. I am delighted to have Seagate CFO, Gianluca Romano, here with me. I also have Shanye here in the audience. She heads Seagate's IR team. This obviously is fireside interactive. I do have some prepared questions. I do leave time at the end for investors, so if you have burning questions, please make sure. We're short on time here always. Do raise your hand, please. We will bring the mic to you so that folks on the web can also hear. I'll first turn it over to Gianluca for some prepared comments.

Thank you, Asiya, and thank you everyone for being here today. As always, I will be making forward-looking statement today, and you can learn more about the risk associated with those statements on our website.

All right. Great. Gianluca, I have been asking a lot of these companies, obviously you guys are seeing great growth here. Investors sit back. There is always going to be skeptics worried about, is this cycle really different? Why is it different? So maybe you can opine on that. Why do you think the cycle is different for the HDD space and for Seagate in particular?

Well, I would say every cycle has different drivers. I would say we are very happy on the situation today. It is not for sure the beginning of the cycle because it is already more than three years that we are improving our revenue and our profitability. We discussed at our last earning release, now based on the POs that we have in place, how we see improvement also for the entire fiscal 2027, fiscal year 2027. Every quarter we see improvement in both revenue and profitability. So it is for sure a strong cycle. We see demand growing even faster than what we were thinking. So the gap between supply, demand is not decreasing, it is actually a little bit increasing.

We are trying to grow our exabyte as fast as we can through technology transition and moving from our 30 terabyte drive HAMR to our 40 terabyte drive HAMR. We also discussed about the next drive, that will be a 50 terabyte drive that we will start to qualify about in a year from now. So just not four quarters from now, we will be already in call with a new drive. So this is where we really focus, is technology transition, drive more exabyte as a company, moving the mix up, through the technology. Of course, we are not increasing our units, but we are increasing our exabyte and we are targeting that at least 25% CAGR in the next two or three years.

Okay. As I said, there are always folks who are going to say, "But when do they think they can digest this capacity?" As if the build is complete, but obviously we are seeing CapEx numbers go up. Citi themselves raised their AI CapEx numbers as well. Just as you think about the build that is happening and the exabytes that are getting deployed for storage, in particular HDD storage, do you foresee at least over the next, I do not know, two to three years, that there is going to be some digestion of this storage media that has been deployed?

Based on our LTAs, I would not say so. No. We see volume growing every year. We have LTAs in place for the next 2, 3 years, and we see those volumes going up. We have purchase orders in place for the next 4 or 5 quarters, and that are very specific POs with the right mix, with the right price, with the right time to deliver. But then we have also a longer-term LTA where we commit on a certain exabyte volume that our customers need to plan their data center growth. And we see those volumes actually increasing year over year. So we don't see today any change in the trend that we have seen in the last 2 or 3 years.

Okay. And then, obviously as the industry is transitioning from training, we're seeing a lot more inferencing. Inferencing tends to be just that much more data being generated. Just how do you think about that 25% exabyte CAGR that you've laid out? And I know that's supply versus demand.

Yeah So demand's probably greater than that.

But when you think about the incremental HDD capacity that your customers are deploying, is there any way for the investors to think about, okay, this is going towards training, or towards inferencing, or this is just more traditional HDD demand that was getting replaced?

Well, there are a lot of drivers for demand. Of course, AI today is a huge part of that demand. There are a lot of traditional application that require a lot of data, and on top of that, you have AI, and more recently you have video AI that is consuming even more exabyte. But there are also other application that you will see in the next 2 or 3 years. We are looking at robotic AI, how to use more robotic automation in manufacturing and also outside manufacturing for more normal life that require a lot of video cameras, a lot of monitoring, a lot of data storage. You will see also, I think, a strong improvement in autonomous driving. And all those cars, if you are in San Francisco, Yeah or if you are in Phoenix, you see a lot of cars going around.

All those cars have a lot of cameras, and they collect data all day long, all night long, and all the data gets stored to improve their performance and also for compliance. When those new application will start to evolve in different places and in different part of the world, that is a lot, a lot of data storage that will be required. We see a lot of reason why data storage will continue to grow. When we put all the data together, the new applications, what our customers are telling us, and the other component inside the data center, when you put all together, we don't see today a reason why this trend should not continue.