Shares of data storage manufacturer Seagate (NASDAQ:STX) jumped 7.2% in the afternoon session after Bank of America reaffirmed its ‘Buy’ rating and significantly raised its price target on the stock to $215 from $170.
The nearly 26.5% adjustment in the price target reflects growing confidence in Seagate’s prospects, particularly due to the demand driven by artificial intelligence (AI). This optimism is fueled by excitement over the company’s new hard disk drives tailored for AI data centers and its breakthrough Heat-Assisted Magnetic Recording (HAMR) technology, which supports the need for mass-capacity storage. The move pushed the stock to trade above $200 for the first time.
The sentiment from BofA was shared by others on Wall Street, with analysts at Citigroup also maintaining a ‘Buy’ rating and a $215 price target, further bolstering investor confidence in the company’s growth trajectory.
The shares closed the day at $211.12, up 7.7% from previous close.
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Seagate Technology’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 24 days ago when the stock gained 3.3% after the major indices rebounded, as Fed Chair Jerome Powell delivered dovish remarks at the much-awaited Jackson Hole symposium.
Powell suggested that with inflation risks moderating and unemployment remaining low, the Federal Reserve might consider a shift in its monetary policy stance, including potential interest rate cuts. This outlook eased market concerns about prolonged high interest rates and their impact on economic growth. The prospect of lower borrowing costs bolstered investor confidence, particularly in sectors that have lagged, leading to a broad rally across the market.
Seagate Technology is up 145% since the beginning of the year, and at $211.93 per share, has set a new 52-week high. Investors who bought $1,000 worth of Seagate Technology’s shares 5 years ago would now be looking at an investment worth $4,477.
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