I have watched Seagate’s comeback story, and it has been one of the most impressive in the entire S&P 500. In fact, after the comeback, Seagate now ranks fourth in the top year-to-date S&P 500 performers according to Slickcharts. That performance is after Sandisk, Dell, and Micron. But on Friday, July 17, Jim Cramer posted on X (formerly Twitter) something you should pay attention to, and it was not a buy call.Comeback in Seagate is impressive, even as I think it might be an excellent opportunity to trim if you don’t have much cash on hand.Seagate Technology (STX) closed the week at $787.66, up 5.66% on the session, according to Yahoo Finance. The stock is up 186.72% year-to-date and 441.28% over the past year. You may think those are typos, but they’re not. The three-year return stands at 1,285.43%.Cramer is not calling this a sell. No. He is calling it a trim, and the distinction matters. Knowing when to lock in your profits and exactly when to trim a winner is an elite skill. So Cramer is acknowledging the comeback while flagging that investors who are light on cash might use the strength to rebalance rather than hold a position that has compounded this dramatically heading into July 28 earnings.Also Read: Seagate Technology Holdings PLC Latest News and StoriesWhat has driven Seagate’s extraordinary comebackThe Seagate story in 2026 is a direct function of what Artificial Intelligence (AI) infrastructure spending requires, at scale. Training and serving large language models generate enormous quantities of data. That data needs somewhere to live, and hard disk drives remain the most cost-efficient mass-capacity storage medium available at hyperscale.More Jim Cramer:Jim Cramer’s cryptic comments on key AI supplier turn headsJim Cramer says investors are getting the Mag 7 all wrongJim Cramer recommends buying these 5 stocksSeagate’s HAMR technology, which uses heat-assisted magnetic recording to pack vastly more data onto each drive, is the product innovation that elevated the company from a commoditized hardware maker into a differentiated AI infrastructure supplier.The Mozaic 3 platform reached full qualification across all planned cloud service providers earlier in 2026, and Mozaic 4 has two customers already qualified, according to the company’s March 3 disclosures.The financial results themselves validated the structural shift. Q3 fiscal 2026 revenue came in at $3.11 billionNon-GAAP gross margin of 47%Non-GAAP diluted EPS of $4.10Free cash flow of $953 million$641 million in debt was retired in a single quarter
Source: April 29 Q3F26 Earnings Results.
CEO Dave Mosley described the quarter as “record margin performance” and said Seagate is “entering a new era of structural growth.”What Seagate’s July 28 earnings needs to deliverManagement guided fiscal Q4 2026 revenue of $3.45 billion, plus or minus $100 million, with non-GAAP diluted EPS of $5.00, according to the company’s guidance.Seagate holds a Zacks Rank #1 (Strong Buy) with an Earnings Surprise Prediction (ESP) of +1.75%, indicating a strong probability for an earnings beat. Related: Seagate CEO drops eye-opening message on exploding AI data demandFor the July 28 earnings, Zacks also expects Seagate to report earnings of $5.10 per share, reflecting a 97% year-over-year increase.The sequential revenue step from $3.11 billion in Q3 to $3.45 billion in Q4 is meaningful, and the EPS trajectory from $4.10 to $5.00 in a single quarter reflects continued margin expansion as higher-capacity drives generate more revenue per unit at lower incremental cost.This is what Wall Street will focus on beyond the headline print. Forward guidance language on hyperscaler demand trajectory into fiscal year 2027Commentary on Mozaic 4 ramp timingAny update on new long-term supply agreementsThose three items collectively will determine whether the July 28 print extends the rally or creates a “sell the news” event after an extraordinary run.
The Mozaic 3 platform reached full qualification across all planned cloud service providers earlier in 2026, and Mozaic 4 has two customers already qualified.Chris Jung/NurPhoto via Getty Images
Why Cramer’s trim call makes tactical sense at this levelMy read of Cramer’s comment is that he is applying basic position management logic to a stock that has earned its gains but now carries elevated expectations heading into earnings. That makes a lot of sense. I am also of the same idea because, at the end of the day, you need to pay yourself after a massive rally. Lock in some profits. If we get a retracement to a key level and positive forward guidance after the earnings, then you can also add to your winners for a potential extension of the rally.Related: Jim Cramer recommends buying these 5 stocksSTX at $787 is pricing in continued execution. The Q4 guidance is already known. For the stock to meaningfully re-rate higher after July 28, Seagate either needs to beat the $5.00 EPS guidance by a material margin or provide fiscal 2027 guidance that exceeds analyst estimates. Either outcome is possible given the demand environment. Neither is guaranteed.The risk Cramer is pointing to is this. Investors who accumulated STX below $400, or even below $300, sitting on 3-digit percentage gains and more, have earned the right to take some profits before an event that could go either way. That is not a bearish call on the business. It is sound portfolio management.Also Read: Jim Cramer’s Recent StoriesFor investors who bought more recently and have a smaller gain, the calculus is different. The structural AI storage thesis has not changed. Seagate’s balance sheet is healthier than it has been in years. The demand environment remains intact as well. My argument is that sitting through earnings with full conviction is a defensible position, too.The question Cramer is posing is essentially this. How much of your portfolio is Seagate right now? If the answer is a lot, trimming before July 28 is prudent. If it is a modest position, the risk of cutting early may outweigh the benefit of the insurance.Related: Jim Cramer says it’s not the time to buy surging AI stock