Seagate Technology (STX) has been on an impressive run, soaring 63% over the past three months. The stock’s rally is powered by a combination of factors, including strong industry tailwinds and the company’s focus on improving profitability, reducing debt, and boosting cash flow.

The demand for mass-capacity storage is growing, driven by the growing digital shift toward cloud services and the ongoing expansion of data center infrastructure to support artificial intelligence (AI) advancements. Seagate, with its industry-leading data storage solutions, is benefiting from this surge as enterprises and hyperscale cloud providers increasingly rely on its high-capacity hard drives.

The company’s financial performance confirms the strength of this trend. In its most recent fiscal third quarter, Seagate delivered a 30.5% year-over-year revenue increase and an 81% jump in adjusted gross profit. The company’s management highlighted that Seagate has now expanded gross margins for eight consecutive quarters and posted the third-highest operating margin in its history.

Supporting this growth is Seagate’s supply discipline, shift to a build-to-order model, and dynamic pricing strategy have all helped it stay profitable.

Looking ahead, Seagate continues to see solid demand for its products, which is expected to drive its financials and share price higher. While STX stock is currently trading above the analysts’ average price target of $125.72, the highest price target for Seagate is $200, implying further upside potential of over 41% from current levels.

Seagate Poised for Strong Growth Ahead

Seagate will continue to benefit from strong demand for its 24-terabyte (TB) and 28TB products, which are the company’s top performers in terms of revenue and storage volume. Adding to the momentum is the introduction of its new Heat-Assisted Magnetic Recording (HAMR)-based Mozaic drives. Volume shipments to select customers are underway, and a broader rollout is expected in the second half of 2025.

Demand from the cloud segment remains a key driver of growth. In the March quarter, cloud nearline revenue and exabyte shipments jumped nearly 10% sequentially and almost doubled year-over-year. Growth is being fueled not only by major cloud and hyperscale providers but also by increasing interest from edge data centers and private cloud operators.

Seagate’s long-term outlook is strong, with customers now committing to supply agreements that extend into the first half of 2026. Despite global challenges such as tariffs, the company is managing its risks well. It’s diversifying its manufacturing and supply chains to stay ahead of shifting global trade policies and expects minimal impact on its fourth-quarter results.

On the financial front, Seagate is also making significant progress in strengthening its balance sheet. At the end of March, it had reduced its debt to $5.1 billion after retiring $536 million during the quarter. Its net leverage ratio improved to 2.1x, and further reductions are expected in the months ahead.

Cash generation is also trending higher. Free cash flow in the March quarter rose to $216 million, up from $150 million in the prior period, and management anticipates continued improvement throughout the rest of the calendar year. The company is also maintaining stable inventory levels at $1.5 billion as it gears up to meet future demand, particularly for HAMR-based products.

So, Can Seagate Stock Hit $200 in 2025?

Given the stock’s recent surge, Wall Street analysts currently have a “Moderate Buy” consensus on Seagate. Moreover, with shares currently trading above Wall Street’s average price target, there’s skepticism baked into the market.

That said, Seagate is in a strong position. Solid demand, a favorable product mix, growing adoption of its next-generation technology, and the ability to raise prices all support its potential for strong earnings and cash flow. As profitability rises and its HAMR technology gains wider acceptance, reaching a $200 price target in 2025 seems increasingly achievable.