We Think Seagate is an HDD Behemoth Riding Secular Growth Tailwinds Despite No Economic Moat

Seagate is a leading designer and manufacturer of hard disk drives used for data storage in consumer and enterprise applications. We think Seagate is successfully transitioning its portfolio to focus on mass-capacity drives for cloud providers and enterprises as consumer applications for legacy HDDs switch to faster flash-based solid-state drives. We expect continued demand for mass-capacity drives over the next five years as enterprises look to capture more data and use a multitier storage approach, implementing both mass-capacity HDDs and smaller enterprise-grade SSDs as complements in data centers. Seagate has consistently driven costs down for its mass-capacity HDDs by advancing to larger capacities, and we think it will continue to do so by leveraging new technologies like heat-assisted magnetic recording.