Seagate Technology Just Added to the Nasdaq 100. Time to Buy?

Seagate technology (STX) was a standout performer in the S&P500 This year, shares have roughly tripled in value through 2025, for a year-to-date gain of 233%. Only West Digital (WDC) – its direct competitor in the field of hard disk drives (HDD) – and the new spin-off SanDisk (SNDK), a pure flash memory, have posted stronger returns among large-cap stocks.

This remarkable rally has put STX in the spotlight, culminating in a major milestone on Friday Nasdaq announced that Seagate will join the Nasdaq-100 Index as part of the annual reconstruction, with the recording taking effect on December 22. The addition alongside peers such as Western Digital and four other stocks underscores the growing recognition of data storage leaders in the technology ecosystem.

For investors, the question is: Has this explosive run left STX overloaded, meaning latecomers missed the boat? Or does the stock still have meaningful upside potential as AI-driven demand accelerates?

The rise of AI storage is driving Seagate’s outperformance

Seagate’s surge hasn’t just outpaced the megacap tech giants Nvidia (NVDA) and Palantir Technologies (PLTR) – which has posted strong but relatively modest gains amid broader AI enthusiasm – but almost every other component of the S&P 500. The main driver is the explosive demand for high-capacity hard drives in AI data centers.
While most attention has focused on GPUs and semiconductors, the reality is that training and running large language models generates massive data sets that require cost-effective, high-density storage. Cloud hyperscalers like Amazon (AMZN), Microsoft (MSFT) and Google are rapidly expanding infrastructure, prioritizing Nearline HDDs and high-capacity HDDs for archival and bulk storage needs.

As a leading hard drive manufacturer, Seagate has immediately benefited from this, reporting robust revenue growth – up more than 30% in recent quarters – and greatly improved margins thanks to disciplined price and supply management.

Unlike flash-based SSDs, which dominate in speed-critical applications, HDDs excel in cost per terabyte for petabyte-scale storage, making them indispensable for AI workloads. Seagate’s fiscal 2025 results reflected this shift, with its enterprise and cloud segments accounting for the majority of profits. Strong guidance and analyst upgrades further fueled the momentum as investors saw storage as an undervalued play in the AI ​​gold rush.

These structural tailwinds have allowed STX to eclipse pure software AI names like PLTR and even chip leaders, highlighting how infrastructure hardware is accounting for a larger share of AI spending.

Index inclusion and passive inflow in the future

The addition to the Nasdaq-100 is timely and is expected to lead to significant buying in index funds such as Invesco QQQ Trust ETF (QQQ), which manages hundreds of billions in assets. Historical precedents show that additions are often boosted in the short term by forced inflows, potentially providing a new catalyst for STX.

Combined with continued cloud capex cycles, this positions Seagate in a favorable direction heading into 2026.

In short

STX hasn’t run its course yet – there’s still room for the next stage higher. The stock trades at around 19x forward earnings and has a PEG ratio of roughly 0.73 (based on consensus five-year EPS CAGR estimates of almost 27%) and remains attractively valued relative to its growth prospects.

The data explosion in AI shows no signs of slowing down, even as concerns about its sustainability grow. Seagate’s market leadership in high-capacity storage should support increased demand. While volatility is likely in cyclical hardware, current numbers suggest STX is cheap for its trajectory. Investors can reasonably buy Seagate and watch for a possible revaluation as earnings visibility increases.