Seagate shares fall 5.7% in morning trading as sell-off hits tech stocks
Key Facts
Seagate shares fell 5.7% in Friday morning trading on October 30, according to Investing.com, as technology stocks faced broad pressure in the same session. The stock had closed at $700.47 on October 29, according to data provided by EL7. The Nasdaq fell 2.9% on Friday, while the S&P 500 fell 1.8% in its worst daily performance since June, according to the Associated Press. The agency said the sell-off was linked to concerns about valuations of artificial intelligence stocks. Pressure was not limited to Seagate: Sandisk and Western Digital also declined amid weakness in storage stocks, according to Investing.com.
The decline came days after the company reported results for its first fiscal quarter of 2027, which ended on October 2, with revenue of $4.233 billion, compared with $2.629 billion in the corresponding quarter a year earlier, according to Seagate. GAAP net income was $1.761 billion, versus $549 million a year earlier. GAAP gross margin also rose to 57.3% from 39.4%. Non-GAAP diluted earnings per share were $7.68, compared with $2.61 in the comparable quarter. These figures highlight the breadth of the financial improvement the company reported, even as the stock came under pressure in trading after the results.
Chief Executive Dave Mosley said the company achieved "a new record level of profitability and the highest free cash flow ever," pointing to an improving demand environment, according to a Seagate statement. Free cash flow reached $1.5 billion for the quarter, and the company returned $568 million to shareholders through dividends and share repurchases. It also said it generated $1.7 billion in operating cash flow and repaid about $1.2 billion of principal, bringing total debt to $2.4 billion at quarter-end. After the quarter ended, it repaid an additional $750 million of principal, reducing total debt to $1.6 billion. These cash flows and debt repayments form part of the backdrop to the results, which coincided with the stock's decline.
The company set second fiscal quarter 2027 revenue guidance at $4.8 billion, plus or minus $100 million, and non-GAAP diluted earnings per share at $9.20, plus or minus $0.20. Meanwhile, Investing.com pointed to continued pressure after the results and said Summit Insights downgraded the stock to "Hold." Susquehanna, Citigroup, TD Cowen and Bernstein SocGen also lowered their price targets after the results were announced. The analyst revisions coincided with a broader sell-off in technology, while portfolio manager Joe Tigai said AI trading was moving "from a phase of hopes and expectations to a phase in which companies are being asked to show results."
Seagate announced a quarterly cash dividend of $0.76 per share, payable on January 7, 2027, to shareholders of record as of the close of business on December 23, 2026. The dividend follows the company's announcement that it returned $568 million to shareholders in the first fiscal quarter through dividends and share repurchases. The stock therefore faces a mix of market pressure and analyst revisions in the session following the results, alongside strong quarterly figures and higher guidance for the next quarter. The dividend payment date in January follows the record date set in December. The morning decline, at 5.7%, remains an intraday reading as reported by Investing.com.