Western Digital Price Target Raised by Morgan Stanley

Morgan Stanley on June 15, 2026, named Western Digital and Seagate top picks and raised the Western Digital price target, citing AI-driven data-center demand and tighter hard-disk drive (HDD) supply as drivers for higher pricing and earnings.

Morgan Stanley Names Top Picks and Raises Targets

Morgan Stanley identified Seagate and Western Digital as its top recommendations in IT hardware, maintaining Overweight ratings on both. The firm raised Western Digital’s price target to $650 from $488 and Seagate’s to $1,035 from $767. Analyst Erik Woodring based the call on Asia supply-chain checks and meetings with Western Digital CEO Irving Tan and CFO Kris Sennesael. These interactions increased confidence in strengthening demand, upward price-per-terabyte trends, and accelerating capital returns. The note reframed HDDs as a key AI-infrastructure trade, prompting broader analyst revisions that still lag behind Morgan Stanley’s new targets.

HDD Supply Shortage and Pricing Outlook

Morgan Stanley projects nearline HDD demand will grow 40–50% annually, outpacing supply growth of 30–35%, resulting in a 10–15% supply shortage in 2026 that is expected to persist through at least 2028. The firm estimates a nearline supply gap of about 300 exabytes in 2026, widening to roughly 400 exabytes in 2027 and 2028. Current blended nearline pricing for Western Digital and Seagate stands near $14.30–$14.90 per terabyte. Internal supplier targets aim for $25–$30 per terabyte by 2027–2028, with some spot transactions already reaching $30–$35 per terabyte for buyers without long-term agreements.

The firm attributes this outlook to AI and cloud workloads, including AI inference and “agent” tasks that increase general-purpose server shipments and HDD attach rates. Hyperscale customers are running deployments at nearly 100% utilization compared with about 70% historically, with minimal inventory and just-in-time purchasing. Rising NAND flash prices also support HDD suppliers’ pricing power. Morgan Stanley’s base-case fiscal 2028 earnings per share (EPS) estimates for both companies are about 70% above then-current Street consensus. Under an optimistic pricing scenario, EPS could increase roughly tenfold between 2025 and 2028.

Morgan Stanley highlighted Western Digital’s dual-tracked UltraSMR (ultra-shingled magnetic recording) and HAMR (heat-assisted magnetic recording) roadmap as an underappreciated strength. It expects commercial launches of these next-generation drives between the second half of 2026 and the first half of 2027, which are critical to maintaining competitive density and cost per terabyte as AI storage demands grow.

Corporate Actions and Capital Management

On June 11, 2026, Western Digital filed a Form 8-K disclosing privately negotiated agreements to exchange 1,038,681 shares of SanDisk common stock it holds for Western Digital common stock. The exchange will be based on the volume-weighted average prices of SanDisk and Western Digital over the three trading days from June 16 to June 18, with the transaction expected to close on June 22, subject to customary conditions.

Separately, Seagate announced plans to redeem approximately $150.7 million of 3.50% exchangeable senior notes due 2028. This move is part of broader capital-management efforts amid improved demand visibility.

Morgan Stanley’s research has sharpened investor focus on storage companies as key AI-infrastructure plays, setting the stage for further earnings revisions and capital-allocation decisions across the HDD sector.