Morgan Stanley Adds Seagate (STX) to Core 2026 as Cloud Capex Accelerates

Morgan Stanley has named Seagate Technology (STX) to its Core 2026 roster, highlighting accelerating cloud capital expenditure as a key catalyst for the storage vendor. The firm argues that renewed investment from hyperscalers and enterprise data-center operators is lifting demand for high-capacity hard disk drives (HDDs) and nearline storage systems — areas where Seagate remains a market leader.

Analysts at Morgan Stanley point to a recovery in cloud capex after a period of moderation, driven by expanding artificial intelligence workloads, streaming services and data retention needs. Those secular trends increase demand for bulk-capacity storage that is more cost-efficient at scale than many solid-state alternatives, bolstering the case for HDD vendors in the near-to-medium term.

Seagate’s product mix — including enterprise HDDs and systems designed for large-scale storage environments — positions the company to capture a disproportionate share of incremental cloud spending. Morgan Stanley’s inclusion of Seagate in a multi-year core selection emphasizes conviction in the company’s exposure to structural growth drivers rather than short-term cyclical swings.

That said, Morgan Stanley’s thesis acknowledges risks. Continued migration to flash and SSD technologies, volatile end-market capital budgets, and execution challenges around manufacturing and inventory management could temper upside. The pace and composition of cloud providers’ future purchases will be critical: higher spending on performance-heavy NVMe storage, for example, would favor SSD vendors over HDD specialists.

Investors looking at Seagate should weigh durable demand signals from hyperscalers and data-center operators against competitive and macro uncertainties. Morgan Stanley’s Core 2026 designation suggests a multi-year view that anticipates steady cloud capacity growth and a sustained role for cost-effective high-capacity HDDs in large data repositories.

Bottom line: Morgan Stanley’s move underscores an investment thesis that centralizes cloud capex recovery and long-term data growth as primary drivers for Seagate’s revenue profile, while also flagging the strategic and market risks that could influence outcomes over the coming years.