Is Seagate A Better Way Than Apple To Own AI Hardware Demand? Trefis Team Tue, November 10, 2026 at 8:50 PM EST 4 min read STX +2.27% AAPL -0.84% MSFT -1.92% GOOG +0.96% AMZN +2.21% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
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Apple (AAPL) and Seagate Technology (STX) are both owned on the bet that AI lifts demand for their hardware. Apple management sees AI as a reason for customers to upgrade. Data center customers, meanwhile, took 90% of the capacity Seagate shipped in the September quarter. That makes Seagate look like the more direct way to own the bet, if those buyers keep ordering at higher prices. So how much of Seagate's supply have those customers already claimed?
Seagate Has Committed Most Of Its Supply Through 2028
Seagate's data center customers signed up for years, not one quarter at a time. On Seagate's October 27, 2026 call, management said long-term supply agreements through calendar 2028 allocate the vast majority of the capacity the company can supply to data centers. In the nearer term, Seagate expects December quarter revenue of $4.8 billion, plus or minus $100 million, following $4.2 billion in the September quarter. Prices for 2028 are not set yet.
Apple expects December quarter revenue to grow 7% to 10% from a year earlier, following 12% growth in the September quarter, and gave no outlook beyond December. That range reflects constrained supply. Apple expects to be short of memory for Mac and iPad because demand has been higher than it expected. So Seagate's demand is signed up years ahead, while Apple's outlook covers one quarter and is limited by supply, mainly of memory.
Is Seagate Raising Prices Faster Than Costs?
So far, Seagate is. The company recorded an operating margin of 48.9% in fiscal Q1 2027, the quarter ended October 2, 2026, against 26.9% in the same quarter a year earlier. Management said better pricing and product mix more than offset higher costs for some outside parts, though passing those costs on is sometimes not so predictable. Seagate's spending is light too. Management expects capital spending of 4% to 6% of revenue in fiscal 2027, and Seagate expects to hold more cash than debt by the end of calendar 2026.
Like Seagate, Apple is paying more for a part it buys: memory. Apple's gross margin was 47.9% in the September quarter, and management expects 45% to 46% in the December quarter, with most of the drop coming from higher memory costs. Apple raised prices on Mac and iPad in June and on iPhone in September to offset part of those costs.
Where Seagate Leads Apple, And Where It Trails
Over the latest twelve months for each company, Seagate is the cheaper, faster-growing and more profitable of the two. Seagate trades at 26.3 times earnings, against 38.7 for Apple. Seagate's revenue grew 44.4%, against 15.1% for Apple, and its operating margin was 40.5%, against Apple's 33.0%.
Apple carries less debt for its size: Apple's total debt equals 1.6% of its market value, against 2.3% for Seagate. Seagate's figure uses its debt as of October 2, 2026, and it has since paid off another $750 million. Apple has also held its margin for longer. In the twelve months to September 2024, Apple's operating margin was already 31.5%, while Seagate's was 13.1%. And Apple's sales are spread wider, with iPhone bringing in about half of its September quarter revenue, while data center revenue made up 81% of Seagate's.
So Seagate's lower multiple is on margins it reached within the past two years. If its customers stopped committing ahead, or its costs caught up with its prices, its margin could head back toward a level that was far lower only two years ago.
Demand looks like the firmer part of Seagate's case, with its data center customers committed for now. Pricing is the less certain part because Seagate has yet to set 2028 prices. Seagate's operating margin in its next report, expected in January 2027, is the number to watch.
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