HomeMarketsSeagate stock rises after note redemption, strong AI demand

Seagate stock rises after note redemption, strong AI demand

Posted: 12 June 2026, 19:32 CET 2 min read

Seagate will redeem all outstanding 3.50% exchangeable notes due 2028, cutting about $150.7 million of debt as AI-driven demand lifts Q3 fiscal 2026 revenue and free cash flow.

Seagate Technology shares rose 8.3% on Friday after the company announced it will redeem all outstanding 3.50% exchangeable senior notes due 2028, removing about $150.7 million of debt. The announcement coincided with quarterly results showing higher revenue and cash generation tied to artificial intelligence workloads.

For the third quarter of fiscal 2026, Seagate reported non-GAAP revenue of $3.11 billion, a 44% increase year over year. Revenue from its data center business reached $2.5 billion, about 80% of total sales and up 55% from the prior year. The company shipped 199 exabytes of hard disk drive capacity in the quarter, a 39% increase from the year-ago period and a 5% rise sequentially.

Seagate reported free cash flow of $953 million for the quarter, a 57% sequential increase and the highest quarterly free cash flow in ten years. The company reported the figure represented a 31% free cash flow margin. Year-to-date free cash flow was $1.987 billion. Gross margin for the quarter was 46.5%.

The planned redemption will extinguish about $150.7 million in notes due in 2028. Seagate indicated the action is intended to improve its capital structure and financial flexibility. The company’s debt-to-equity ratio stood at 3.82, above the industry average.

A Form 4 filing shows Executive Vice President and Chief Technology Officer John C. Morris sold 573 shares on June 11 for roughly $471,426. The sale occurred while the stock continued to trade higher.

Seagate supplies hard disk drives to enterprise customers and competes mainly with Western Digital in many segments. Management attributed recent demand to inference-driven workloads, agentic artificial intelligence and multimodal applications that increase data storage needs.

The company did not provide specific guidance on capital allocation beyond the note redemption. Quarterly results and the debt reduction were reported alongside comments about allocating resources to support growing AI-related storage demand.