Seagate’s valuation surge contrasts with its historical earnings volatility amid AI-driven data center demand growth.
Jim Cramer labeled Seagate Technology Holdings (NASDAQ:STX) as “too pricey,” citing a near-50x multiple on next year’s earnings estimates. The stock’s valuation stands out for a commodity-driven business with historically inconsistent profitability.
Seagate’s earnings per share jumped from $0.19 in fiscal 2023 to $1.29 in fiscal 2024 and $8.10 in fiscal 2025, driven by surging demand for data storage in AI and data centers. However, Cramer noted the sector’s boom-bust cycles, questioning whether the rally is sustainable.
The company, alongside peers like Western Digital and SanDisk, has seen outsized gains as data center expansion fuels demand for storage solutions. Historically, such stocks traded at low multiples due to earnings unpredictability.