Seagate Technology Stock Surges by 9% Following Morgan Stanley Upgrade and AI Demand Forecast

In Tuesday’s trading session, Seagate Technology (STX) stock is experiencing a significant surge in value. Its share price has increased by 9% as of 3 p.m. ET, according to S&P Global Market Intelligence data.

Morgan Stanley released a report on Seagate today, upgrading its rating on the stock from equal weight to overweight. The firm’s analysts also raised their one-year price target on Seagate from $73 per share to $115 per share.

Although the stock has risen approximately 56% over the past year, it is still down around 17% from its peak. However, Morgan Stanley’s latest coverage suggests that the company anticipates reaching a new valuation high in the near future.

The analysts at Morgan Stanley believe that Seagate will benefit from the ongoing recovery in the data storage market and its leading position in heat-assisted-magnetic-recording (HAMR) technologies. They also expect demand for Seagate’s products to be driven by generative artificial intelligence (AI), which could lead to significant improvement in profitability and earnings performance.

Seagate’s near-term earnings performance could be 25-30% better than previously expected due to rising demand related to AI and improvements in sales and earnings performance. Additionally, there is a belief that AI-related demand will continue to boost performance and potentially lead to higher valuation multiples for Seagate and other data storage companies, resulting in improved sales, earnings, and overall market sentiment towards the sector.