Seagate (STX): HAMR Time

1. Executive Summary

Unlike Western Digital, Seagate is a pure-play Hard Drive manufacturer. The thesis is technological: Seagate's bet on HAMR (Heat-Assisted Magnetic Recording) allows them to ship 30TB+ drives before competitors, securing the high-margin "Mass Capacity" slots in hyperscale data centers.

Key Thesis Points

1. HAMR Lead: Seagate is quarters ahead of WDC/Toshiba in shipping HAMR drives at volume. This creates a pricing premium.
2. Mass Capacity: 80% of the world's bits live on HDDs, not SSDs. As AI generates synthetic data, the "bit growth" curve benefits Seagate.
3. Capital Return: STX is aggressive with dividends and buybacks, often running with negative equity (high leverage) to reward shareholders.

2. Business Overview

• Mass Capacity: Nearline drives for AWS, Google, Azure.
• Legacy: PC/Consumer drives (declining secularly).

3. Risks

• QLC NAND: If SSD prices drop fast enough (QLC Flash), they could cannibalize the HDD market sooner than expected.
• Leverage: Seagate carries significant debt. In a high-rate environment, interest payments eat FCF.