Seagate top stock pick due to AI-driven data demand

PARAGRAPH 1 --- What happened: Seagate Technology (STX) reported Q3 2026 results on April 28, with revenue of $3.11 billion, driven by strong demand for high-capacity data storage tied to AI workloads. STX shares surged 12% following the beat. The company also raised its Q4 revenue and profit guidance, signaling robust AI spending. STX has gained 107.2% YTD, making it one of the top large-cap stocks. Data-storage stocks jumped the next day, with Western Digital (WDC) also benefiting from AI-driven demand.

PARAGRAPH 2 --- Market impact: The AI boom is fueling a storage crunch, driving demand for HDDs and boosting profits for STX and WDC. Analysts like Argus and Bank of America have raised target prices for STX, predicting faster earnings growth and a premium valuation. The surge in AI data center components, such as memory ICs and optical components, is benefiting both STX and WDC, with Bernstein and Evercore ISI upgrading WDC's rating and price target.

PARAGRAPH 3 --- What to watch next: Investors should mark their calendars for STX's next earnings release on July 28, 2026, to see if the company maintains its strong momentum. Additionally, keep an eye on WDC's earnings on June 15, 2026, to gauge the broader AI storage demand trend. Lastly, monitor any updates on AI spending and data center growth, as these will significantly impact the narrative around STX and WDC.