WDC’s pricing power and constrained HDD supply can compound into durable earnings growth, while technology transitions lift capacity and margins.
The bull case requires pricing strength and roadmap execution to outlast supply growth, but slowing cost efficiency and qualification-dependent volumes raise earnings risk.
as STX this morning on a print that wasn’t as good, although STX held capex while one of the pushbacks against WDC was rising capex intensity for the next couple of years (STX mgmt must have been watching the px action AH on WDC’s print). For context, WDC g...
WDC did +7% q/q exabytes last week. That puts the exabyte debate on STX now, after it was the main knock on WDC. Mgmt explained away the exabyte miss as it planned staging of Mozaic 4 ahead of customer quals (inventory +$129M q/q to $1.70B), said there were...
Pricing. The story of the quarter. Total $/TB rose ~16% q/q to ~$19.2, or +33% y/y vs. ~10% last q and the ~20% the Street read into the Sept guide; DC $/TB rose ~31% y/y, and Edge IoT revenue ($784M, +52% y/y vs. +20% last q, ~17% above Street) came on fla...
Competition. On Toshiba, mgmt wouldn’t speculate but said bringing meaningful HDD capacity online is “orders of magnitude more difficult” than “plugging in a few machines,” and expects supply to stay “fairly tight” through CY28. On build vs. buy for heads a...
STX - 2.5%: Beat Street but came up short of the buyside bar on every line, and the Dec guide ($4.8B / $9.20 EPS) is well above Street but below the ~$4.9–5.05B / $10–10.50 bogeys. Exabytes flat q/q. Tough for a still somewhat crowded long following WDC’s b...
This quarter handed bears several talking points. The ~5–6% EB miss and its explanation (staging ahead of quals, OEM mix at lower capacity per drive) show volume growth is lumpier and more qualification-dependent than a smooth mid-20s CAGR implies, and inve...
WDC did +7% q/q exabytes last week. That puts the exabyte debate on STX now, after it was the main knock on WDC.
The company's stock declined in sympathy with a competitor's mediocre earnings report.
EPS $9.20 vs. $8.54 Street and $10–10.50 bogey. Op margin guided “toward mid-50%” on ~$300M opex implies ~60–61% GM vs. 59.7% Street and the ~62–63.5% bogey. For context, WDC guided Dec revenue ~12% and EPS ~21% above Street; STX is ~7% and ~8% above.
The stock showed positive price action following its earnings beat, indicating a favorable market response.
All this, coupled with some better price action (WDC, BE and LRCX all bouncing nicely after post-EPS declines last week), and individual charts bouncing where they are supposed to be bouncing, makes us think ST/MT path clearer than it was entering the day s...
The company delivered solid financial results, exceeding analyst expectations for revenue and EPS, and provided an optimistic outlook for the next quarter.
Pricing for $/TB is accelerating and is expected to continue expanding year-over-year gains for several more quarters, driving high incremental gross margins.
The stock's valuation is attractive, trading at a low multiple compared to buyside estimates for future earnings, especially given its significant decline from recent highs.
The company's pricing power is strong, with blended $/TB rising significantly due to contractual escalators, renewals at higher prices, strong spot pricing, and a favorable mix towards higher-capacity drives.
Gross margins are improving significantly, beating Street estimates and guidance, with management outlining durable drivers such as pricing, up-mix to higher-capacity drives, and increased exabytes through areal density.
Management expects exabyte growth to accelerate through FY27-28, driven by the rapid transition to 40TB ePMR and the introduction of HAMR technology.
The company's long-term industry fundamentals remain strong, with robust demand CAGR and tight supply, and the company will not add unit capacity, focusing instead on areal density.
The company has strong demand visibility, with top customers providing visibility through 2030-31, and demand signals are increasing across various segments including cloud, AI inference, and physical AI.
Cloud revenue is a significant and growing portion of the business, with demand broadening to enterprise, hybrid-cloud OEMs, neoclouds, and frontier AI labs.
The company's dividend was raised, and a significant portion of free cash flow is returned to shareholders through buybacks and dividends.
The December quarter's revenue is largely de-risked, with most of it under contract and pricing locked, and $/TB growth expected to exceed 28% year-over-year.
Management clarified that ~35% exabyte growth is not guidance, the long-term target remains >25%, and supply growth is aimed at existing customer demand, not creating excess capacity.
The company confirmed that four hyperscalers remain in HAMR qualification, with no pushout in the timeline.
The analyst's comment about pricing growth eventually slowing down after 3-4 quarters was walked back by management, indicating no set timeline for moderation.
The current market environment for storage is an AI supercycle, with supply constrained by heads and media, not assembly lines, favoring vertically integrated leaders like WDC.
New pricing is being incorporated into long-term agreements with escalators and renewals, and customers are planning storage five-plus years out, suggesting a planned, multi-year infrastructure buildout.
Toshiba's capacity ambitions are viewed skeptically by bulls due to its reliance on third-party components and history of missed roadmap milestones.
The company's pricing accelerated significantly, exceeding Street models, with every 5 points of CY27 pricing growth adding substantial revenue and EPS.
Gross margins are guided to 60.5% and are expected to reach the mid-to-high 60s by CY28, driven by new ePMR and HAMR technologies.
Operating expenses are essentially fixed, allowing operating margins to approach 60% as revenue grows.
With high free cash flow margins and a significant portion returned to shareholders, the company can retire a substantial portion of its share count annually.
The increase in capital expenditure is seen as a positive, addressing the bottleneck in heads and media, which are critical for future growth.
Exabytes. Shipments were 248 EB (+22% y/y, +7% q/q), with nearline at 223 EB (+22%, ~90% of EB). Both came in a touch below Street (~249-250 total, ~227 nearline). Growth was stuck at 22% for a second quarter, below the >25% LT target and well behind STX’s...
Concerns exist about a lower cost/TB decline and potential oversupply due to higher capital expenditure, despite the company's strong financial performance.
Exabyte growth was below the long-term target for a second consecutive quarter, and cost/TB declines were slower than expected due to DRAM/NAND inflation.
The stock fell after hours due to management's comments on capital expenditure being "modestly above" the expected range and accelerating exabyte supply growth, which touched on post-Toshiba supply concerns.
Bears are concerned about industry dynamics changing for the worse, management's comments on "pricing moderation" after a few quarters (though walked back), and slower cost/TB declines.
If WDC, STX, and Toshiba significantly increase supply, industry supply could outrun demand, potentially reversing the current price increases.
Cost/TB fell significantly less than the long-term target, attributed to DRAM/NAND inflation and being between product transitions, indicating a lag in HAMR technology compared to competitors.
Free cash flow came in below Street estimates due to doubled capital expenditure and a significant increase in inventory.
The long-term agreements that bulls rely on may not prevent a supply response, as management conceded that further out, less volume and pricing are covered, and purchase orders only extend 4-5 quarters.
Incremental demand supporting spot pricing comes from neoclouds and frontier labs, which are highly exposed to current financing stress in the AI sector.
Hyperscale customers, who represent a large portion of revenue, have an incentive to diversify suppliers and push back on renewals once supply becomes less constrained.
The bull case assumes continued strong pricing and the company closing its technology gap, but recent results show exabyte growth stalled and cost/TB declines slowed, indicating the HAMR lag.
HAMR volume is still dependent on qualifications that will not finish until CQ1’27, and the promised acceleration means managing two transitions simultaneously while absorbing HAMR head throughput losses.
Management's own comment that pricing growth will "eventually slow down" after 3-4 quarters suggests a peak in the second derivative of pricing in 2H CY27, despite a partial walk-back.
WDC -2% despite handedly beating bogeys, BE -4% on a beat and raise, SPCX +2% on a sell-side upgrade and on reports they’re in talks to access 80k cell sites (Towers +7-8%; Telcos -4-5%).
The company's stock was mixed, with sentiment suggesting that if Elon Musk can add significant capacity, the market might not be as tight as perceived.
Morgan Stanley views current ~8x FY28 EPS valuations as too punitive, arguing they assume an HDD cycle peak by FY28 and an 80% SSD price collapse over 2–3 years.
Checks remain bullish, with spot nearline pricing significantly higher than blended contracts, the CY27/28 supply shortfall widening, and non-nearline pricing rising 15–30%+ quarter-over-quarter.
Morgan Stanley's December-quarter EPS estimate is approximately 10% above Street consensus, with further upside possible, and sets a price target of $643.
Western Digital has a cleaner tactical setup into earnings due to a lower buyside bar.
STX/WDC: MS says 8x FY28 already prices in an HDD peak; supply shortfall + pricing still moving higher
Nearline exabytes are allocated into CY29 with pricing contracted through CY27/28, indicating strong long-term demand and pricing stability.
STX/WDC bulls argue nearline exabytes are allocated into CY29 now with pricing contracted through CY27/28; bears will point to UBS’s own STX note this morning, which sees TDK’s external heads and Toshiba capacity eventually breaking the “no new capacity” na...
WDC/STX -5-6% and Memory -5% leading the way lower. Some pointing to the CXMT news from yesterday and Musk’s tweet below:
HDDs and NAND bounced hardest (STX/WDC opened -8%/-7%, SNDK -5.5%), MU much less so. Near the bottom today, WDC/STX were trading at ~5x/7x ‘28 buyside numbers (assuming pricing reaches $30/TB) so definitely investors sharpening their r/r numbers here despit...
The company's 40TB ePMR technology is expected to reaccelerate nearline EB growth and margins ahead of 44TB HAMR in 1H27, with 40TB+ targeted for over 50% of nearline bits by F3Q27.
Despite Street expectations for 10% quarter-over-quarter revenue growth and 73% incremental gross margin, 25%+ EB demand, 10% annual cost/TB declines, and vertical integration support further upside.
A key risk is the durability of pricing beyond contracted CY27 volumes, rather than Toshiba's capacity.
STX -3.8%; WDC -2.6% stayed heavy on the Toshiba HDD capacity overhang, even as Evercore added WDC to its tactical list. Good pushback in Slack here: MK said 2028 is already locked in with 2029 pricing talks ongoing and Toshiba won’t dent a ~400EB shor...
The $380 million investment by Toshiba is not substantial for the industry and likely includes equipment upgrades and next-gen technology, not just new supply.
Toshiba's datacenter drives are 1-2 generations behind, with 40TB+ HAMR not expected until CY28, while its exabyte growth is roughly in line with STX/WDC, and unit forecasts are low teens in FY27 and mid-teens in FY28.
Toshiba's reliance on external suppliers for key components like heads, media, and substrates creates supply gates, with Resonac reportedly sold out through late CY27/CY28.
Toshiba has already delayed its LSD million drives/quarter target due to yield issues.
Even if Toshiba doubles its output, it would only add about 10% to industry supply, similar to what STX/WDC themselves are adding, and the 2028 supply gap is likely to remain wider than Toshiba's incremental capacity.
The recent underperformance of STX/WDC, despite strong pricing, suggests that some of the Toshiba news was already priced in by Asia investors.
Semis +10bps lagged with megacap AI up and most everything else down: AVGO +2.1%; NVDA +2.1% worked after Morgan Stanley said both are shielded from the AI power crunch, the latter hitting new all-time highs while the neocloud/BTM complex reversed early gains (NBIS -...
WDC +6.3%; STX +4.5% bounced off Friday's ~10% Toshiba gap-down with the Street out in force. Bulls had a whole long list of things to push back on. Take a deep breath: 1) $380M isn’t a huge investment for this industry, and some likely goes toward equipmen...
Unlike memory names, HDD multiples have not yet discounted the risk of increased competition and still trade at double-digit P/Es, making them vulnerable to any new entrant using price as a negotiation tool.
Bulls argue that Western Digital has already secured a significant portion of TDK's 2027 capacity, mitigating concerns about potential competition from Toshiba.
The company experienced a significant drop following a report that it is vying with Toshiba for TDK's HDD-head business, which bears interpret as Toshiba becoming a more serious competitor.
Bears suggest that Toshiba's potential ownership of TDK's HDD-head business could lead to concerns about supply allocation and component pricing, in addition to increased competition in finished HDDs.
Early one today as I need to head out shortly. QQQs +61bps as of 2pm ET, after the S&P and NDX both tagged fresh record highs late morning before fading as crude bounced off its lows; small caps lagged (IWM -62bps; ARKK -1.8%). Software +1.2% outpaced semis...
The Street pushed back on concerns regarding Toshiba's investment, arguing that the $380M investment is not substantial for the industry and likely includes equipment upgrades and next-gen technology, not just new supply.
Toshiba's datacenter drives are technologically behind STX/WDC, with their 40TB+ HAMR not expected until CY28 at the earliest, indicating they are not a near-term competitive threat.
The reported doubling of exabyte output at Toshiba's Philippines facility translates to only about 70% total company EB growth, which is roughly in line with STX/WDC's growth, and higher-capacity drives mean 'doubling capacity' does not equate to twice as many physical drives.
Toshiba's reliance on external suppliers for key components like heads, media, and substrates creates supply bottlenecks, with one supplier reportedly sold out through late CY27/CY28.
Toshiba has already delayed its LSD million drives/quarter target due to yield issues, suggesting challenges in scaling production.
Even if Toshiba doubles its output, it would only add approximately 10% to industry supply, which is similar in absolute exabyte terms to what STX/WDC themselves are adding.
The projected supply gap in 2028 is likely to remain wider than Toshiba's incremental capacity, indicating that Toshiba's expansion will not fully address the market's needs.
The recent underperformance of STX/WDC, despite strong pricing checks, suggests that some of the Toshiba news may have already been priced in by Asia investors.
Semis +10bps lagged with megacap AI up and most everything else down: AVGO +2.1%; NVDA +2.1% worked after Morgan Stanley said both are shielded from the AI power crunch, the latter hitting new all-time highs while the neocloud/BTM complex reversed early gains (NBIS -...
WDC +6.3%; STX +4.5% bounced off Friday's ~10% Toshiba gap-down with the Street out in force. Bulls had a whole long list of things to push back on. Take a deep breath: 1) $380M isn’t a huge investment for this industry, and some likely goes toward equipmen...
Unlike memory stocks that have already discounted Chinese supply risks and trade at lower multiples, HDD multiples have not yet discounted the risk of new entrants, trading at double-digit P/Es.
Any new entrant attempting to gain significant market share in an oligopoly will likely use price as a negotiation tool, potentially giving hyperscalers leverage in negotiating 2029-2031 contracts.
Windsurfing 1 hour ago Toshiba data center HDD is 1-2 generations behind STX/WDC, and upstream key components is very tight, not sure why and how they do it
The company's stock declined due to news that Toshiba is investing ¥60bn to double its production capacity for hard disk drives and targeting 30% market share.
The company's multiples are vulnerable at >20x Fwd PE.
In Tech, Semis leading the way higher as NVDA +1.7% close to all-time highs this morning on the back of MS making it a top pick after NDRs this week; STX/WDC ~-10% on news Toshiba is investing ¥60bn to double its production capacity for hard disk drives while targeti...
Agentic workloads create much larger memory requirements across HBM, DRAM, NAND, and HDD, benefiting WDC from logs/traces.
SNDK is viewed as the clearest beneficiary as KV cache and suspended agent state spill into flash, while WDC/STX benefit from logs/traces, P/NTAP from enterprise context storage, and DELL/HPE from higher CPU/DRAM/NAND content. Networking/connectivity names...
The company is expected to benefit from logs/traces, along with STX.
SKHY on Bloomberg’s report that Solidigm is weighing a US IPO as soon as 2027 at up to $100B. Sell-side out with bullish MU previews (JPM sees the DRAM/HBM shortage through CY27-28); investors are focused on FY27 margin durability as LTAs get layered on. HD...
Pricing for the company's products is still climbing.
STX/WDC: Hearing Edgewater positive saying pricing still climbing
The stock was weaker despite some positive checks, as memory prices may be approaching a peak, particularly for NAND.
HDDs underperformed (STX +2% /WDC +1.5%) despite positive note out from Cleveland saying hyperscale/OEM HDD ASPs moving materially higher into CY27 and unpriced volumes potentially at $25–30+/TB,.
The company's HDDs underperformed despite a positive note from Cleveland suggesting materially higher hyperscale/OEM HDD ASPs into CY27 and unpriced volumes potentially at $25–30+/TB.
HDDs were weaker, and the space has been one of the weakest over the last month and a half, being one of the few AI semi sectors finally below the "Leopold Lows."
Pricing checks for volume agreements continue to be positive, with discussions for future years already beginning.
WDC +1% / STX -1.5%: Pricing checks continue to sound positive as ‘28 volume agreements are lock down with some ‘29 discussions starting although ‘28 pricing elements still unset.
The stock is finally receiving some positive attention.
STX/WDC +3% finally getting a little love.
Bernstein remains constructive on WDC, despite its slower HAMR transition being a relative disadvantage.
TD Cowen's FMS discussions indicated notably constructive HDD feedback, with long-term pricing power running above current 2027 expectations, reinforcing WDC's positioning.
Bernstein sees WDC's slower HAMR transition as a relative disadvantage compared to STX.
The company confirmed strong demand and pricing for its Hard Disk Drives (HDD).
WDC confirmed strong HDD demand/pricing while STX comes out after earnings looking like the relative winner: earlier HAMR (44TB HAMR is already ramping at two hyperscalers, roughly 2–3 quarters ahead of WDC’s planned 1H27 launch), driving faster exabyte gro...
The company missed earnings expectations in the semiconductor sector.
The last few days have dinged some AI favorite names which now look range bound near-term: WDC, SNDK, ALAB, AMD among others. Despite the LT bull cases remaining intact, this earnings season has seen a lot more dispersion and smaller beats than the early Ag...
The company is lagging behind STX in HAMR technology, with its planned 1H27 launch being 2-3 quarters behind STX's current ramp-up.
The company is experiencing slower exabyte growth (22% vs. STX's 34%) and less significant cost-per-terabyte declines (-5% vs. STX's -14%) compared to its competitor.
WDC -13% / STX +2%: tale of two stocks following their print.
Gross margins were better than expected, with guidance for mid-55% compared to expectations of 54-55%.
The company missed top-line expectations, especially compared to a competitor, with revenue of $3.75B missing expectations of $3.85B and guidance of $4.1B missing expectations of $4.35B.
Despite better gross margins, the improvement was insufficient compared to a competitor.
Evercore ISI expects WDC to beat June-quarter expectations due to stronger-than-expected pricing, with tight nearline supply, cloud demand, and favorable LTA repricing supporting gross margin of approximately 51.6% and operating margin of about 41.3%.
September-quarter pricing is expected to remain strong.
FY27 estimates already embed approximately 41.6% revenue growth and gross margin near 54%, suggesting high expectations that may be challenging to exceed.
The key debate is whether WDC can sustain more than 60% incremental margins while executing on ePMR, UltraSMR, and its planned 1H27 HAMR ramp.
The stock was weaker, with no clear reasons provided for the decline.
HDDs weaker: STX/WDC -3%…didn’t hear any great reasons.
US names following earlier with SNDK/MU/WDC/STX -7% early. Many other names down 4-5% as momentum looks to take another hit early. Good chart from our friends at Jefferies showing the magnitude of the momentum unwind, the worst going back to 2000:
Morgan Stanley reiterated its Overweight rating, expecting strong pricing-led beats and raises due to tightening exabyte supply and improved hyperscaler visibility.
Morgan Stanley anticipates June results to be at the high end of guidance and September guidance to exceed Street expectations, with CY27–28 pricing discussions moving towards $25–$30/TB and spot exabytes commanding significant premiums.
Checks indicate an annual supply shortfall through 2028 and demand visibility extending to 2032, supporting substantial annual EPS growth through at least 2028.
Clev was positive, calling out further upside to CY27 pricing trends as more volume fills in at $20-$30/TB, with some signs of pricing reaching $30+.
Positive pricing checks indicate CY27-28 pricing discussions are moving towards $25-$30/TB, with spot EBs commanding significant premiums and an annual supply shortfall through 2028, implying strong EPS CAGR.
The company remains a favored name despite recent pullback and is expected to outperform in a choppy market, with the storage narrative gaining importance amid memory turbulence.
Storage demand is decoupled from compute and memory, as every token generated requires storage, suggesting sustained spend on storage even if compute and memory CapEx slows.
STX/WDC -4% despite some positive pricing checks.
Korea fell 9% and is dragging down semis -3% with it early while Software +50bps and Internet +10bps are green. Memory names the weakest as Asian names were all down double digits: SNDK/WDC/MU/STX -5%.
The stock experienced a decline.
The company's price target was raised due to expectations of stronger nearline HDD shipment growth, continued ASP expansion, improving gross margins, and durable revenue growth driven by AI infrastructure demand.
The company benefits from extending customer visibility into CY28 and disciplined industry capacity allocation.
Wells Fargo sees Seagate as having the greater upside from earnings revisions and spare capacity, while both STX and WDC benefit from extending customer visibility into CY28 and disciplined industry capacity allocation.
The stock was a notable underperformer with no specific news driving the decline.
HDDs continue to reach all-time highs.
HDDs continue their rip to all-time highs: STX/WDC +4-6%.
The company's stock showed strength, leading the market higher alongside other HDD and Memory names.
In Techlandia, strength in semis continues although more bifurcated this morning with HDDs/Memory leading us higher (WDC/STX +8-10%) and SNDK/MU +2-3% while CPU names softer (ARM -2%, INTC -1% although AMD +50bps)
The stock showed strength, indicating continued positive momentum in the HDD sector.
HDD strength continued today: WDC +4%/ STX +1%
Morgan Stanley raised its price target to $650, as management indicated customers are seeking volume visibility into 2032 and hyperscalers are operating with low HDD inventory, reinforcing strong demand.
The firm believes pricing is increasing significantly more than current expectations due to upward pricing discussions, accelerating exabyte growth, and rising demand from AI, cloud, video, and synthetic data workloads.
Morgan Stanley highlighted that UltraSMR and HAMR technologies are on track, with hyperscaler qualification progressing well, and the market is underappreciating WDC's technology leadership and margin potential.
Combined with accelerating capital returns and strong free cash flow generation, Morgan Stanley sees a path to materially higher earnings than consensus expects.
JPM is constructive on the HDD setup, arguing that pricing, not exabyte growth, is the primary earnings driver, with investors overly focused on exabyte growth.
Management emphasized that the current supply-constrained environment allows price increases to stick across product transitions, avoiding typical givebacks seen in prior cycles.
Both WDC and STX indicated incremental gross margins remain around 90% as pricing flows through, and JPM believes operating leverage is likely understated, particularly at STX.
JPM views both names favorably, with pricing, margin expansion, and operating leverage driving upside rather than a reacceleration in unit growth.
HDDs: JPM Says Pricing, Not Exabyte Growth, Remains the Bigger Earnings Driver for WDC and STX
Customers are increasingly seeking volume visibility into 2032, with long-term agreements expanding and hyperscalers operating with just 1-2 weeks of HDD inventory, indicating strong demand.
HDD vendors are targeting significantly higher pricing, with expectations of $25-$30 per TB over the next 2-3 years compared to current pricing below $15/TB, which would lead to substantial EPS upside.
Checks indicate that pricing has inflected higher over the last several weeks, suggesting strong market momentum.
The company has significant pricing torque, with incremental gross margins at 90%+, meaning pricing increases flow directly to the bottom line.
Assuming pricing close to $30/TB in CY28, the company could achieve EPS of $70+, significantly higher than the street's current estimate of ~$30, implying substantial upside.
The stock is trading at less than 10x projected CY28 EPS, suggesting it is undervalued given the significant upside potential from pricing.
HDDs outperformed today with WDC +16% & STX +9%. Didn’t hear any great reasons for the difference in performance despite a lot of questions. Names were up on several positive sell-side notes.
Checks here seem to have inflected higher over the last several weeks. We wrote a little about what $30/TB means for WDC/STX yesterday in our weekly. Remember, lots of pricing torque in these names as incremental gross margins are 90%+. From our weekly yest...
As a reference, street here at ~$45 for STX in CY28 and close to $30 for WDC so this pretty significant upside. These shouldn’t be trading <10x.
Interesting to compare multiples on NAND vs. HDDs. Assuming $300+ in SNDK buyside EPS and $70+/$100+ for WDC/STX, SNDK trading at 7x and WDC/STX trading at 9x. What’s the right premium here? Some more thoughts in Slack here
Even using assumptions well below its channel checks, Morgan Stanley’s FY28 EPS estimates sit roughly 70% above Street for both STX and WDC, prompting PT increases to $1,035 for STX and $650 for WDC.
JPM became more constructive on the HDD group, arguing the industry is entering a period of stronger and more durable pricing supported by AI-driven demand, long-duration customer agreements, and disciplined supply growth.
The firm highlighted accelerating demand from cloud and AI datacenters, where HDDs remain critical for storing expanding datasets and supporting AI workflows.
Long-term agreements (LTAs) are improving visibility and reducing cyclicality.
JPM expects the company to deliver pricing above prior expectations through FY27, driving higher revenue growth, margin expansion, and earnings revisions.
HDDs: JPM Says Pricing Is Accelerating Faster Than Expected, with Further Upside for WDC and STX
Mizuho sees growing TPU, OpenAI, and MTIA deployments as incrementally positive for memory and storage demand, reinforcing its bullish view on WDC.
AI-driven storage demand and industry supply discipline are creating a stronger-for-longer HDD cycle.
STX/WDC: Citi Raises Targets, Sees AI-Driven HDD Tightness Extending Through 2028
The CFO reiterated an exabyte growth outlook well above 25% CAGR for the next three to five years, driven by cloud and AI applications across training, inferencing, and physical AI.
The business is structurally de-risked, with approximately 90% of revenue from hyperscalers/cloud on multi-year visibility and long-term agreements, with demand currently exceeding tight supply.
Gross margins have crossed into the low 50s with incremental gross margins of 70-100%, sustained by value-based pricing, including a 9% year-over-year increase in average selling price per terabyte in March.
Storage demand is decoupled from compute and memory, as every use of compute power generates more storage, suggesting sustained growth even if compute/memory CapEx slows.
Citi raised its price target, citing AI-driven storage demand and industry supply discipline supporting a stronger-for-longer HDD cycle with shortages persisting through at least 2028.
Wells Fargo remains constructive on the company, citing a durable >20% growth outlook and visibility extending beyond 2029.
The firm argues the debate is no longer whether the cycle exists, but how long it lasts, indicating confidence in sustained growth.
Wells Fargo also remains constructive on STX and WDC, citing a durable >20% growth outlook and visibility extending beyond 2029. The firm argues the debate is no longer whether the cycle exists, but how long it lasts.
Barclays remains bullish on the broader memory/storage trade, arguing LTAs are materially improving pricing visibility and reducing historical cyclicality.
The firm highlighted stronger nearline HDD demand/pricing discipline for the company.
Barclays raised its price target, arguing the market still underestimates the durability of AI-driven storage demand and structural pricing improvement.
Memory: Barclays Says MU/STX/WDC Still Have Another Leg Higher as LTAs Improve Visibility
HDD strength stood out today.
Barclays reiterated bullish talking points regarding LTA contract structures increasingly resembling infrastructure-style recurring revenue frameworks.
Evercore raised its price target, arguing the company remains one of the best-positioned beneficiaries of the AI storage cycle.
The firm highlighted expectations for significant exabyte CAGR through 2029 driven by AI training/inference/agentic workloads, increasing adoption of UltraSMR/HAMR technologies, and growing use of LTAs to smooth cyclicality and improve visibility.
Evercore also sees margin expansion potential as HAMR ramps and HDD cost-per-TB declines over time, while noting the company continues returning excess cash to shareholders and retains meaningful optionality through its remaining SNDK stake.
An analyst firm was positive on the company after meetings with management, highlighting expectations for over 25% exabyte CAGR through 2029, driven by AI workloads, adoption of advanced technologies, and increased use of long-term agreements to smooth cyclicality and improve visibility.
The stock was down early in pre-market trading, aligning with a broader weakness in tech semiconductors following a decline in the Korean market.
STX/WDC -3%, QCOM -3%. 5% STX/WDC 3% QCOM 3%
The stock performed strongly, indicating positive sentiment in the memory sector.
The company's earnings beat expectations, leading to positive stock performance.
The stock quickly recovered from an initial dip post-earnings, turning positive during the trading day.
Charts are being bought aggressively on any mini-pull back (AVGO, LITE, AMD), plenty of names breaking out to new highs, beats are following through to the upside (NOK, STX, QCOM, WDC, TXN, VRT, INTC), and misses are being bought up (CLS, TER, GLW, ON, AMZN...
SNDK/WDC missed heightened expectations but not much in those prints to shake bulls. We go over everything below then get to the usual…
Evercore ISI sees a beat-and-raise setup driven by incremental EB shipments and sustained pricing strength, supported by supply constraints and long-term agreements.
Improving yields and strong near-term HDD fundamentals, with margin expansion emerging as a key focus alongside pricing discipline and contract renegotiation flexibility.
Street estimates may still be conservative, with further upside tied to execution on HAMR scaling and long-term roadmap delivery.
Evercore maintains Outperform, citing durable demand and AI-driven storage tailwinds.
BofA raised its price target, seeing significant EPS upside on tight HDD supply and pricing strength, with scenario analysis pointing to potential CY28 EPS of ~$33.
Improving visibility from long-term contracts and HAMR-driven capacity gains support higher exabyte shipments and margin expansion.
Current valuations underwrite more conservative outcomes, with upside driven by stronger $/TB growth and operating leverage.
BofA reiterates Buy, citing durable supply-demand dynamics and structural earnings upside.
STX/WDC: BofA Raises PTs ($700/$495), Sees Significant EPS Upside on Tight HDD Supply and Pricing
The firm says constrained HDD supply and sustained pricing strength create meaningful upside to earnings power, with scenario analysis pointing to potential CY28 EPS of ~$45 for STX and ~$33 for WDC. The analyst notes improving visibility from long-term con...
Barclays raised its price target to $405, seeing significant value in the drive names due to potential earnings upside and multiple expansion.
Edgew is positive, indicating rising upside potential in FY27 as WDC pushes for better pricing, with hyperscale customers projecting EB demand growth of 30-50% through CY28.
STX: Barclays Upgrades to OW/$625, Raises WDC PT to $405 — Denser Platters Drive Earnings and Multiple Expansion
Barclays upgrades STX to OW (PT to $625) and raises WDC to $405, seeing the most value in the storage/memory hierarchy in the drive names on both earnings upside and multiple expansion.
HDDs strong (STX +4% / WDC +3%): didn’t see much here other than BofA raising PTs saying STX is set up for a strong F3Q/F4Q with data center demand offsetting seasonality, driving rev/EPS above Street and continued GM expansion (~45–47% range) supported by...
The company faces a growing valuation disconnect, with the market treating HDDs as structurally stable despite still-cyclical demand dynamics.
HDD demand could see a sharp drop once capacity ordering peaks, creating downside risk to revenue/EPS.
Current multiples (~11x) already reflect elevated expectations vs prior cycle peaks.
STX/WDC/MU: UBS Prefers Memory Over HDD; Sees Valuation Disconnect and Cyclical Risk
The company's stock declined, indicating a negative sentiment in the HDD market.
Mizuho reiterated Outperform and raised its price target, citing tight NAND/HDD supply driving pricing through 1H27E.
The KVCache ramp is driving NAND demand as eSSDs deliver significantly higher read/write speeds than HDDs and contain more NAND content in inference racks compared to training-only AI racks.
The upcoming High Bandwidth Flash (HBF) in 2H26E, offering 6x HBM capacity at 100x TLC SSD bandwidth, could create new NAND supply constraints as 16-layer SLC-NAND stacks consume conventional capacity.
Memory/Storage: Mizuho Raises PTs Across MU/SNDK/STX/WDC — KVCache, QLC eSSDs and HBF Drive Inference Storage Inflection
The company is positioned for greater than 20% sales, EPS, and FCF CAGRs as nearline EB shipments grow in the mid-20s%, driven by AI and cloud data creation.
The HDD industry is structurally healthier due to consolidation, nearline capacity being sold out through CY26 with multiyear BTO/LTA programs, and stable-to-increasing pricing.
HAMR/ePMR technology transitions are expected to drive 10-15% cost reductions and push gross margins from the low-50s% towards 60%+, with both companies targeting approximately 50% incremental margins.
The market may re-rate the company to 25-30x P/E multiples, levels typically reserved for infrastructure compounders, reflecting the 'new HDD model'.
STX, WDC: Evercore ISI Raises PTs to $550/$378 (~20% Upside Each); HDD Industry Shifting From Cyclical to Growth Compounder
The stock continued its upward breakout trend, with ISI and MS expressing positive views.
HDDs are seen as the simplest way to capitalize on the structural memory shift, with the company positioned for over 20% sales, EPS, and FCF CAGRs driven by mid-20s% growth in nearline EB shipments due to AI/cloud data creation.
STX +6% / WDC +8.5% as both names continue to break out to the upside.
The selloff in HDD and memory names following Google's TurboQuant announcement is considered an overreaction, as TurboQuant's impact on HDD demand is zero and negligible on NAND.
The firm upgraded the stock to Outperform with a target of $340, impressed by its ePMR roadmap.
Demand and pricing are supported by AI workloads, richer content creation, and data sovereignty requirements.
WDC/STX/SNDK: Bernstein Upgrades WDC to Outperform, Says TurboQuant Selloff Overdone — Zero Impact on HDD, Negligible on NAND
” The firm upgrades WDC to Outperform with a $340 target (20x FY28 EPS), impressed by its ePMR roadmap though noting what looks like a soft push-out of HAMR by 1-2 years. Bernstein raises STX’s target to $620, calling it their top HDD pick on a 12-month+ ho...
Bernstein upgraded the company to Buy, stating that Turboquane has no impact on HDDs.
WDC +7.5%/STX+8% as Bernstein upgraded WDC to Buy saying Turboquane has 0 impact to HDDs. They called STX their top pick on a 12-month+ horizon given HAMR’s higher areal density should drive accelerating cost declines in FY27-28
The company's HAMR roadmap appears to be pushed out by 1-2 years.
The stock performed strongly as part of a broader positive trend in the memory sector.
SNDK +12% with a nice bounce, strongest out of the memory group although rest were also strong with MU +5% despite press reports out of Asia they lost out on HBM4 in Vera Rubin (debate how true this is); STX/WDC +6-7%
The stock experienced weakness along with other memory and HDD names.
The stock rose, following the trend of other memory and storage companies.
MU +6%, STX/WDC +6-8% following along as well
Citi reiterated a Buy rating and raised its price target due to sustained cloud HDD demand and improving margin mix, lifting FY26 and FY27 EPS estimates.
TrendFocus C4Q data showed growth in exabytes on flat units, reflecting disciplined supply, hyperscaler-led demand, and continued ePMR/HAMR transitions, supporting stable-to-rising pricing per TB.
Supply is expected to remain tight through CY27 with limited flash substitution risk, and the company benefits from higher-margin drive qualifications, planned SanDisk monetization, and ongoing capital returns.
The analyst raises estimates for HDD names, noting moderated $/TB ASP declines and incremental gross margin upside.
The stock was negatively impacted as HDDs/memory experienced a hit.
QQQs -57bps today in a pretty fragmented factor day coupled with AI infra unwind / rotation: the worst pocket was Network Equip (-7.5%) and anything tied to optical + storage + DC plumbing, with CIEN (-13.1%) COHR (-9.6%) and LITE (-11%) dragging the optica...
Main read-throughs that should get a bid today are other names where tight supply/demand is causing pricing to be strong: HDDs (WDC/STX), NAND (SNDK), and Optical (LITE, COHR). Hearing some fears this morning around rising DRAM prices mean for Hardware (AAP...
STX + WDC + SNDK: Initiated Buy at China Renaissance
WDC/STX: Citi Reiterates Buy as Pricing Strength and Demand Visibility Push Targets Higher
HDDs WDC +4.5% / STX+3.3%: Didn’t see much here other than strength in memory names and GOOGLs new video generation model Veo 3.1 gaining some traction which puts multi-modal back in the spotlight
Sustained nearline HDD demand and pricing power driving significant EPS growth.
Progress on HAMR and ePMR transitions supporting margin gains.
STX/WDC: ISI Sees Structural Re-Rating Ahead for HDD Industry; Ups PTs to $330/$190
ISI reiterates its Outperform stance on Seagate (STX) and Western Digital (WDC), raising price targets to $330 and $190 respectively, arguing the HDD industry is undergoing a durable structural transformation driven by AI, cloud, and supply discipline. The...
STX/WDC/SNDK: Citi Positive on Storage Fundamentals; Closes Near-Term Bullish View Post Rally
Citi remains constructive on HDD and NAND fundamentals across STX, WDC, and SNDK, citing stronger storage demand, supply tightness, and solid pricing momentum —but says it is closing short-term upside views following sharp stock gains into earnings. The fir...
STX/WDC: Wells Fargo Raises PTs to $240/$150 on Stronger Nearline Demand, Margin Expansion
WFC forecasts WDC EPS above $11/sh by CY27 and STX EPS above $17/sh, supported by incremental gross margin expansion to the mid-40% range and disciplined capital returns. Both companies are expected to return over 75% of free
Notably, the Economic _Daily_News reports that the rally has now spilled over to memory modules, with Taiwan's ADATA and Team Group both suspending the first such move since 2017, price quotes underscoring a severe supply-demand imbalance SNDK 59 JT NAND ab...
Research through 2026-10-28 · 2025-10-09 to 2026-10-28 · 70 source reports.
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Research through 2026-11-03. Artifact validity does not establish factual accuracy or research freshness.