Three suppliers to the AI build-out reported third-quarter numbers on Tuesday. Hard drives, chip testers and optical fiber. All three grew fast. The market still punished two of them, which says more about expectations than about the businesses.
Seagate: a 61% jump and record margins
Seagate’s fiscal first-quarter revenue came in at $4.23 billion, up 61% on a year ago and ahead of estimates. Non-GAAP earnings were $7.68 a share. Non-GAAP gross margin reached 57.8%, a number that would have looked absurd for a disk drive company three years ago.
The margin story is HAMR. Seagate’s heat-assisted recording drives, sold under the Mozaic name, pack more capacity per platter, and cloud buyers pay for capacity. Microsoft Azure qualified Mozaic before the quarter closed. Seagate raised its dividend to $0.76 a share, paid down debt from $1.48 billion of free cash flow, and guided to $4.8 billion of revenue and $9.20 of non-GAAP EPS next quarter.
The shares fell after hours anyway. When a stock has run as hard as Seagate’s, a beat-and-raise is the minimum.
Teradyne: up 70%, down 6%
Teradyne revenue rose about 70% to roughly $1.31 billion and net income more than doubled to about $342 million. Semiconductor test carried the quarter, driven by the AI accelerators and high-bandwidth memory that need far more test time per chip than older parts. CEO Greg Smith pointed to growth in all three business groups and to rising wafer fab spending through 2027.
The stock dropped around 6% on guidance. Investors wanted more.
Corning: the cleanest read
Corning’s core sales rose 19% to $5.08 billion and core EPS rose 36% to $0.91. Optical Communications did the heavy lifting: sales up 44% to $2.38 billion, segment net income up 80%. Enterprise Networks, where data center fiber sits, grew 84%, and sales of products tied to generative AI more than doubled.
Corning also signed four long-term, multibillion-dollar customer agreements in the quarter, Verizon and AT&T among them. Fourth-quarter guidance calls for core sales of $5.2 billion to $5.3 billion and core EPS of $0.96 to $1.00. Management says its plan to double the annualized sales run rate to $40 billion by the end of 2030 has started to accelerate.
The common thread
Each company sells something the AI build-out can’t skip. Data has to be stored, chips have to be tested, and GPUs have to be wired together with glass. None of the three depends on which accelerator wins.
That makes them a better read on AI capital spending than the chip designers. Tuesday’s read was strong. The share price reaction tells you how much of that was already in the price.
For a related look at the supply chain, see Hybrid Bonding Is the Bottleneck Nobody Prices Into HBM4.
