Seagate Technology plc STX recently expanded its Exos X family of enterprise drives with helium-based Exos X16 HDD.
Seagate also extended IronWolf and IronWolf Pro family based on Network Attached Storage (NAS) architecture with 16TB storage capacity drives. The company claims the new drives can support workloads of around 300TB capacity per year.
The latest 16TB drive is expected to help customers in improving the overall system reliability with actionable prevention, intervention or recovery options.
We believe incremental adoption of the new high capacity drives will boost the company’s financial performance in the days ahead.
Moreover, expanding portfolio with robust solutions instill confidence in the stock. Shares of Seagate have returned 15.6% year to date, outperforming industry’s rally of 2.7%.
Robust Features to Boost Adoption
The 16TB capacity drive offers high performance to enable hyperscalers and data center customers to manage complex data workloads seamlessly. The drive, priced at $629, has been made available from Jun 4.
When compared with Exos X12 which provides 12TB capacity, Exos X16 offers 33% additional petabytes per rack with a count of 7200 RPM (or revolutions per minute).
Moreover, with Exos X16 customers can leverage the company’s data protection solutions like Seagate Secure Instant Secure Erase.
Notably, Tencent Cloud is leveraging the latest Exos X16 HDD to improve storage density and reduce total cost of ownership (TCO).
What Investors Should Know?
Seagate is investing heavily in order to deliver high-capacity storage devices that would support expansion of cloud infrastructure and cloud applications, which bodes well given favorable market trends. In fact, per IDC data, global spending on public cloud services and related infrastructure is envisioned to hit $210 billion in 2019, up 23.8% over 2018.
The expanded capacity is expected to improve demand for the HDDs among large enterprises, small and medium size businesses (SMBs) and creative professionals. The HDDs are capable of addressing growing storage needs amid huge influx of data generated by emerging technology and services like augmented and virtual reality (AR/VR), high resolution. In fact, it has a MTBF (mean time between failures) 2.5M hours.
Notably, per recent IDC estimates, the global datasphere will grow to 175 zettabytes (that is a trillion gigabytes) by 2025, from 33 zettabytes in 2018. The effective storage is absolutely essential to properly harness this data which favors the adoption of Seagate’s latest solutions.
Moreover, the company’s expanding portfolio with higher capacity drives is likely to boost its competitive position against Western Digital WDC and other storage peers.
Markedly, Western Digital is likely to introduce 16TB HDDs utilizing microwave assisted magnetic recording (MAMR) technology in 2019. Meanwhile Toshiba unveiled 16TB hard disk drives in January, 2019, which are based on Conventional Magnetic Recording (CMR) technology.
Zacks Rank & Stocks to Consider
Seagate currently carries a Zacks Rank #3 (Hold).
A couple of better-ranked stocks worth considering in the broader sector are Rosetta Stone Inc. RST and Silicon Motion Technology Corp. SIMO, both sporting Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Rosetta Stone and Silicon Motion is pegged at 12.5% and 5%, respectively.
(NOTE: We are reissuing this article to correct a mistake. The original version, published yesterday, June 6, 2019, should no longer be relied upon.)
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