Why Seagate and Western Digital Are Rising Alongside Nvidia’s AI Boom

Over the past six months, Seagate Technology (STX) has significantly outperformed both Western Digital (WDC) and Nvidia (NVDA), a dynamic that underscores a deeper, underappreciated relationship between these companies. While Nvidia leads the charge in AI compute with its dominant GPU platforms, Seagate and Western Digital are quietly capturing the storage layer of the AI infrastructure stack—namely, the nearline hard disk drive (HDD) deployments that support every data-hungry model trained on Nvidia silicon.

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The market’s headline focus tends to rest on Nvidia’s AI momentum, but the underlying storage infrastructure has become equally critical. Seagate and Western Digital are no longer general-purpose HDD manufacturers. More than 90% of their business by exabytes now consists of nearline HDDs—high-capacity drives optimized for sequential workloads in cloud and hyperscale data centers. These drives serve as the persistent backbone for AI training sets, inference logs, and long-term data storage, directly supporting Nvidia-based systems like the H100 and GB200.

Seagate Earnings Highlights: Mozaic HAMR Ramp Signals New Storage Era

Seagate reported Q3 FY25 revenue of $2.16 billion, up 31% year-over-year, with non-GAAP EPS of $1.90 and gross margin expanding to 36.2%. CEO Dave Mosley emphasized strong momentum from global cloud customers and highlighted the company's continued shift toward AI-oriented storage. Nearline HDDs accounted for approximately 90% of mass capacity shipments, with 120 exabytes shipped—up nearly 100% year-over-year.

Importantly, Seagate is now ramping its HAMR-based Mozaic platform, with initial commercial shipments planned for the second half of calendar 2025. Early feedback has been positive, and management expects increasing volumes in future quarters. Additionally, the company’s 24TB and 28TB PMR platforms were key volume drivers, with exabyte shipments up 60% quarter-over-quarter. The company guided for Q4 FY25 revenue of $2.4 billion (+11% QoQ), with non-GAAP EPS of $2.40 and continued margin expansion as demand visibility extends well into 2026.

Western Digital Earnings Highlights: Hyperscale Demand Anchors Results

Western Digital posted Q3 FY25 revenue of $2.3 billion, up 31% YoY, with EPS of $1.36 and gross margin at 40.1%. The company reported cloud-related revenue of $2 billion, or 87% of the total, driven by strong nearline HDD shipments and adoption of its 11-disk platform. With over 800,000 units shipped in Q3 and projections to surpass 1 million in Q4, Western Digital is solidifying its presence in the enterprise storage tier supporting AI workloads.

Q4 guidance includes $2.45 billion in revenue and gross margins between 40% and 41%. The company is initiating a dividend and retired $1.8 billion in senior notes, reflecting operational discipline and confidence in cash generation. Long-term agreements with hyperscalers and product leadership in high-capacity drives position Western Digital to remain a key pillar of AI infrastructure deployment.

Primer on HDDs

In the HDD industry, nearline HDDs represent the high-capacity drives primarily used in data centers and cloud infrastructure, often optimized for sequential workloads and infrequent access. If you subtract nearline HDD capacity (in exabytes) from total HDD capacity shipped, the remaining capacity is typically spread across the following three main application segments:

Client HDDs – These are used in desktop PCs, laptops, workstations, and other personal computing devices. Although many clients have shifted to SSDs, HDDs remain in use, especially in lower-cost systems and data-heavy workloads like video editing or gaming where large capacity is valued.

Consumer Electronics – This includes external hard drives, gaming consoles, DVRs, set-top boxes, surveillance systems, and other consumer products. These are typically lower-capacity drives with cost efficiency as a priority.

Enterprise Non-Nearline (Mission-Critical) HDDs – These are 10K and 15K RPM drives used in traditional enterprise storage systems, often in RAID arrays or SANs, with high IOPS requirements. This segment has been shrinking due to SSD encroachment but still exists, particularly in legacy systems.

HDD Nearline Data Center Shipments (Exabytes)

Chart 2 shows exabyte shipments of nearline HDDs from Western Digital, Seagate, and Toshiba from 1Q19 to 1Q25. Both WDC and STX continue to grow aggressively, with Western Digital reaching nearly 165 exabytes and Seagate exceeding 145 exabytes in the most recent quarter. These shipments align directly with AI and cloud data center buildouts, validating the companies' transition into AI-aligned infrastructure providers, report The Hard Disk Drive (HDD) and Solid State Drive (SSD) Industries: Market Analysis And Processing Trends, and ordering can be done on my website at www.theinformationnet.com.

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