AI storage boom is keeping Seagate's hard drives spinning

The AI infrastructure boom isn't just eating all the memory – it's also driving demand for storage, giving high-capacity hard drives a new lease of life, according to Seagate. The storage veteran says cloud operators are buying ever more mass-capacity hardware as AI applications generate and retain growing volumes of data. "Datacenter demand now represents approximately 90 percent of our exabyte shipments," chairman and CEO Dave Mosley told analysts during a call to discuss Seagate's Q4 and full-year results. "Based on the long-term supply agreements in place today, the vast majority of our nearline exabytes are now allocated into calendar 2028," he said. Back in February, Seagate warned that its production capacity of nearline drives was fully allocated for this year, and it had started accepting orders for 2027. "Importantly, we are not seeing customers pull back on planning horizons," Mosley added, suggesting hyperscalers remain keen to reserve hard drive capacity years in advance. AI agents that carry out tasks with varying degrees of autonomy are the latest source of demand for nearline drives – at least according to Seagate's CEO. "With the transition from AI model training to inference to agentic applications, more data is generated and retained for historical context, compliance and future reuse. As these datacenter environments become larger and more complex, customers must balance performance, energy consumption and cost." Cloud operators already address these challenges through tiered storage combining high-performance memory and SSDs with mass capacity hard drives to optimize performance and economics at scale, he added. "Our recent white paper with SK hynix illustrates the importance of tiered storage for inference and agentic AI workloads, which show a direct benefit to hard drive storage. These workloads rely on persistent context across user interactions, and key-value or KV cache is used to retain and reuse that context efficiently." By distributing KV cache data across memory, SSD, and hard drive tiers, organizations can retain more context and avoid recomputing previously generated data. Seagate claims this increases demand for hard drive capacity while reducing the GPU resources spent recomputing old context, leaving more compute available for revenue-generating workloads. Of course, some will say that Seagate would big up the hard drive market. Its SSD business has been described as "utterly trivial," so the company largely depends on selling nearline HAMR disks to hyperscalers and large enterprises. CFO Gianluca Romano acknowledged that Seagate's capacity growth has mostly come from shipping drives with more disks and heads, rather than selling more units. "If you look at our last year, and if you look at the number of disks and the number of heads inside the box, they probably grew between 15 and 20 percent and the units were absolutely flat," he said, describing this as "a normal part of the business." All the same, demand for capacity helped lift Seagate's full-year revenue by 34 percent from $9.1 billion to $12.2 billion. For its fourth quarter, ended July 3, the biz reported revenue of $3.6 billion, up 50 percent from $2.4 billion a year earlier. It expects revenue of $4.1 billion, plus or minus $100 million, in the current quarter – which would represent year-on-year growth of 56 percent. Seagate says it is ramping up production of its Mozaic 4 platform, which supports drives of up to 44 TB, for major cloud providers. The next-generation Mozaic 5 remains on track for qualification shipments in late 2027 and is expected to deliver more than 5 TB per platter. ®

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