Western Digital Jumps 7% as Analysts Call Toshiba Expansion a Non-Threat to HDD Market Leaders

Western Digital surged roughly 7% and Seagate climbed about 5% on October 5 as multiple Wall Street firms urged investors to buy both stocks following a sharp selloff the prior Friday. On October 2, both Western Digital and Seagate fell approximately 10% each after Nikkei reported that Toshiba plans to invest around $400 million to nearly double its hard disk drive production capacity by fiscal year 2027, targeting the fast-growing AI data-center storage market.

Bernstein was among the most forceful in pushing back on the selloff, calling the market reaction a "storm in a teacup" and reiterating its Outperform rating on both stocks. The firm noted that Toshiba's target is to double capacity by March 2028, not to immediately seize market share, and that the expansion does not fundamentally change the supply-demand balance for the industry. Citi and Morgan Stanley also recommended buying Western Digital and Seagate on the dip, with Citi arguing that the HDD industry is currently under-shipping unconstrained demand by a wide margin and that supply is expected to remain tight through 2028.

Toshiba is currently the third-largest HDD producer with roughly 10% of the market by capacity, well behind Western Digital and Seagate. Even if the $400 million investment succeeds in doubling Toshiba's output, analysts say it would still leave the company far short of challenging the two market leaders, whose revenues grew 43.8% and 48.5% respectively in their most recent quarters. Western Digital closed at $415.29 on October 2 before the rebound, while Seagate closed at $848.99 on the same date.