--- title: "Seagate's record quarter met a 30% drawdown the day Broadcom and Microsoft qualified its SMR drives" description: "Shares tumbled 30% from their October peak even as Microsoft Azure Storage and Broadcom cleared HAMR+SMR drives." publisher: "The Inference" section: "Data Center" published: 2026-11-03T15:43:25.502Z modified: 2026-11-03T15:43:25.502Z canonical: https://theinference.org/article/seagate-s-record-quarter-met-a-30-drawdown-the-day-broadcom-and-microsoft-qualified-its-smr-drives language: en keywords: "Seagate, Hard Drives, Data Storage, Gross Margin, Broadcom" --- # Seagate's record quarter met a 30% drawdown the day Broadcom and Microsoft qualified its SMR drives > Shares tumbled 30% from their October peak even as Microsoft Azure Storage and Broadcom cleared HAMR+SMR drives. [Seagate](https://theinference.org/markets/companies/seagate) closed at $593.76 on Nov [1]. 2, down 7.9% that day and 30% from its Oct [1]. 2 close of $848.99 [1]. The same day, its HAMR+SMR drives became the first SMR drives on [Broadcom](https://theinference.org/markets/companies/broadcom)'s host-bus-adapter approved vendor list, and [Microsoft](https://theinference.org/markets/companies/microsoft) Azure Storage qualified the combination [3]. The market is selling the end of a shortage while the company is unlocking the ramp that shortage built. The quarter reported Oct. 27 was the best in Seagate's history: revenue of $4.23 billion, up 61%; adjusted EPS of $7.68 against $7.42 expected; record free cash flow of $1.5 billion [1]. Gross margin reached 57.8% on an adjusted basis, up from 40.1% a year earlier [2]. *Chart: **Seagate's gross margin tripled in three years, and it is the number Toshiba's capacity puts at risk** Bars showing Seagate adjusted gross margin rising from 19% in fiscal 2023 to 35% in fiscal 2025 and 57.8% in the September 2026 quarter.* *Adjusted gross margin, percent, fiscal years to June; Q1 FY2027 is the quarter ended Oct. 2, 2026. Sources: TIKR; Zacks via The Globe and Mail. [1][2]* ## The record was priced, not shipped The complication sits under the headline: the volume engine barely moved. Nearline shipments hit 198 exabytes, up 24% year on year but only 1% sequentially, with product staged ahead of customer qualifications [2]. Data-center customers brought 81% of revenue [2]. Management said most of the capacity it can make is sold under long-term agreements through calendar 2028 [4]. This quarter was priced, not shipped, which is exactly what [Toshiba's plan to nearly double Philippine drive capacity](https://theinference.org/article/toshiba-s-400-million-disk-bet-just-repriced-the-ai-storage-duopoly) by fiscal 2027, ending March 2028, threatens [1]. ## The bears have receipts of their own Diluted shares rose to 232 million from 226 million a year earlier [4], and [insiders sold $587 million of stock](https://theinference.org/article/seagate-s-ceo-banked-75-6m-in-september-the-bigger-buyback-waits-for-2027) over the past 12 months with no buying [5]. [GuruFocus](https://www.gurufocus.com/news/9163414/seagate-technology-holdings-plc-stx-stock-down-79-but-still-overvalued-gf-score-80100) rates valuation 1 out of 10 [5]. ## The January report decides it The December quarter, guided to $4.8 billion of revenue and $9.20 of adjusted EPS, is the test [1]. Gross margin holding at or above 57.8% with exabytes re-accelerating makes this drawdown the entry [1]. Margin slipping first means 13.7 times forward earnings is the whole story [1]. ## Takeaway Seagate's 30% drop reflects market fears of an easing storage squeeze, but long-term supply pacts through 2028 and qualification by Microsoft Azure insulate near-term profitability. ## Sources 1. [TIKR.com, Seagate Just Dropped 30% in a Month. Is It Time to Sell, or Load Up?, 3 November 2026](https://www.tikr.com/blog/seagate-just-dropped-30-in-a-month-is-it-time-to-sell-or-load-up) 2. [Zacks Investment Research via The Globe and Mail, STX Falls 24.1% in the Past Month as Risks Test AI Storage Momentum, 2 November 2026](https://www.theglobeandmail.com/investing/markets/stocks/MU-Q/pressreleases/8595876/stx-falls-24-1-in-the-past-month-as-risks-test-ai-storage-momentum/) 3. [Techzine Global, Seagate HAMR drives with SMR now supported by Broadcom HBA, 3 November 2026](https://www.techzine.eu/news/infrastructure/145480/seagate-hamr-drives-with-smr-now-supported-by-broadcom-hba/) 4. [Trefis via Yahoo Finance, Is Seagate Still The Business You Bought?, 2 November 2026](https://finance.yahoo.com/markets/stocks/articles/seagate-still-business-bought-070415974.html) 5. [GuruFocus, Seagate Technology Holdings PLC (STX) Stock Down 7.9% but Still Overvalued, 2 November 2026](https://www.gurufocus.com/news/9163414/seagate-technology-holdings-plc-stx-stock-down-79-but-still-overvalued-gf-score-80100) --- Seagate's record quarter met a 30% drawdown the day Broadcom and Microsoft qualified its SMR drives — The Inference. Canonical: https://theinference.org/article/seagate-s-record-quarter-met-a-30-drawdown-the-day-broadcom-and-microsoft-qualified-its-smr-drives