Summit Insights double downgraded Seagate to Sell from Buy following the June quarter results. While generative artificial intelligence will be positive for the storage industry in the longer term, the current cloud AI investment hurts cloud storage spending, the analyst tells investors in a research note. Additionally, the firm is cautious about the transition to HAMR-based hard disk drives. Summit also remains concerned about Seagate losing its economies of scale in its factories’ footprint, which would result in continued gross margin headwinds.
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