The drop got here as Seagate CEO Dave Mosley expressed considerations concerning the firm’s capability to satisfy the escalating demand for reminiscence chips on Monday, a development fueled by the enlargement of synthetic intelligence (AI). This led to a decline in main reminiscence shares.
Throughout a JPMorgan convention, Mosley mentioned the challenges of accelerating manufacturing capability at Seagate’s factories, CNBC reported.
“If we took the groups off and began constructing new factories or citing new machines, that may simply take too lengthy. You’d find yourself with extra capability, however then you’d sluggish the speed of progress on that know-how,” he mentioned.
Mosley additionally highlighted the problem of “very lengthy lead instances” and the necessity to keep predictability with its purchasers. He mentioned the corporate has already knowledgeable clients about merchandise deliberate for launch subsequent yr, permitting them to arrange and buy tools for his or her knowledge facilities upfront.
Regardless of these efforts, Mosley mentioned that the demand for reminiscence chips far exceeds what Seagate can at present provide.
“We need to hold that 4 or 5 quarters of visibility very, very stable for what’s being constructed. However the demand is considerably greater than that,” he mentioned.
AI Rush Tightens Chip Provide
Benzinga’s Edge Rankings place Seagate within the 99th percentile for momentum and the nineteenth percentile for progress, reflecting its combined efficiency. Benzinga’s screener means that you can examine STX’s efficiency with its friends.
STX Value Motion: On a year-to-date foundation, Seagate inventory surged 157.65%, as per Benzinga Professional. On Monday, it declined 6.87% to shut at $740.
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