Question: How would you respond if you owned Seagate (NASDAQ: STX) and its value plummeted by 60% or more in the upcoming months?
While this may seem extreme, it is not without precedent. Seagate’s stock has experienced such severe declines previously, and based on its current valuation, history might repeat itself.
Up to this point in 2025, Seagate has achieved an impressive 65% return year-to-date, significantly exceeding the S&P 500’s 5% increase. This rise has been driven by structural improvements in the company and a timely shift towards next-gen technologies like HAMR (Heat Assisted Magnetic Recording). Seagate is currently benefiting from a upswing in the data-storage market, which is being bolstered by the increasing demand for generative AI and cloud infrastructure.
However, behind the AI enthusiasm and operational improvements lies a more cautionary narrative. Separately see, What’s Next For Nike Stock?
Here’s the point: The main takeaway is that during a downturn, Seagate stock could suffer considerable losses. Data from 2020 shows that STX stock lost around 35% of its value within just a few quarters, experiencing a peak-to-trough drop of about 58% during the 2022 inflation crisis, underperforming significantly compared to the S&P 500. This raises the question: Could the stock see a sell-off and potentially fall to $85 if a similar scenario were to occur? As a rule, individual stocks tend to be more volatile than diversified portfolios. Consequently, if you seek growth with decreased volatility, you might want to investigate the High-Quality portfolio, which has outperformed the S&P 500 and yielded returns over 91% since its launch.
Why Is It Relevant Now?
Seagate produces high-capacity HDDs (hard disk drives)—essential infrastructure for storing the immense datasets necessary for training and deploying large language models (LLMs). While SSDs (solid-state drives) are the go-to choice for fast-access storage, HDDs remain dominant in cold storage and hyperscale cloud archives—key applications for companies such as Microsoft, Meta, and Amazon.
Seagate introduced its Mozaic 3+ platform last year, which achieves 3 TB per platter through HAMR technology and incorporates it into its Exos 30 TB+ drives, which have already begun shipping to hyperscale cloud clients. At its June 2025 investor conference, Seagate announced that engineering samples of 40 TB HAMR drives (10×4 TB platters) have already been delivered, with mass production anticipated in the first half of FY 2026. The company intends to launch Mozaic 4+ with 40 TB+ capacity in 2026, followed by Mozaic 5+ providing 50 TB+ drives by 2028, and is aiming for 100 TB HDDs by 2030 as part of its larger HAMR roadmap. While this technological advancement positions Seagate for long-term growth, it also introduces execution risks if demand does not scale as expected.
Seagate forecasts Q4 adjusted EPS (June fiscal year) to be between $2.20 and $2.60, with revenue expected between $2.25–$2.55 billion. Consensus is predicting 38% revenue growth in FY 2025 and 13% in FY 2026. Nevertheless, even solid growth expectations cannot safeguard the stock from macroeconomic shocks, valuation declines, or operational setbacks. With very little margin for error, any misstep could lead to a steep correction.
How resilient is STX stock during a downturn?
STX stock has performed worse than the benchmark S&P 500 index during several recent downturns. While investors remain hopeful for a soft landing for the U.S. economy, how severe could it get if another recession occurs? Our dashboard How Low Can Stocks Go During A Market Crash illustrates how key stocks performed during and after the last six market crashes.
Inflation Shock (2022)
• STX stock decreased 58.2% from a high of $116.02 on 4 January 2022 to $48.49 on 3 November 2022, compared to a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 27 May 2025
• Since then, the stock has risen to a high of $141.44 on 29 June 2025
Covid Pandemic (2020)
• STX stock fell 35.6% from a high of $63.23 on 24 January 2020 to $40.73 on 20 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 4 December 2020
Global Financial Crisis (2008)
• STX stock dropped 89.1% from a high of $28.60 on 2 November 2007 to $3.11 on 23 January 2009, compared to a peak-to-trough decline of 56.8% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 18 April 2012
Valuation
Currently, Seagate trades at 18x consensus 2025 earnings, significantly above its three-year average of only 5x. Its price-to-sales ratio has escalated to 3x, rising from 1.2x in FY 2022. Even its forward P/S of 3x surpasses the three-year average of 2.8x. In comparison, Western Digital (NASDAQ: WDC), a direct competitor, typically trades around 1x P/S during market downturns. Investor confidence is evidently reflected in the stock’s elevated valuation—but with greater height comes a steeper potential fall. The average analyst price target of $125 suggests an 11% downside, even without factoring in a market correction.
Considering the wider economic uncertainties, ask yourself this: Do you plan to hold onto your Seagate stock now, or will you panic and sell if it starts to drop to $100, $90, or even lower? Hanging onto a declining stock is never an easy task. Trefis partners with Empirical Asset Management—an investment firm in the Boston area—whose asset allocation strategies produced positive returns during the 2008-09 period when the S&P lost over 40%. Empirical has integrated the Trefis HQ Portfolio into its asset allocation framework to offer clients better returns and less risk compared to the benchmark index—a smoother journey, as evidenced in HQ Portfolio performance metrics.