Western Digital Shares Rally 6.91% on 10% HDD Demand Growth Projections

Western Digital’s shares surged to their highest level so far this month, climbing 8.14% intraday before closing up 6.91% at $250, surpassing Loop Capital’s recent price target increase from $190 to $250. The rally follows revised analyst sentiment and projections of 10% HDD capacity demand growth by 2026, driven by rising data needs in cloud computing, AI, and enterprise storage.

Analysts attribute the stock’s ascent to improved industry fundamentals, with Western Digital well-positioned to benefit from higher average selling prices for high-capacity drives. The company’s vertical integration model and focus on technological innovations, such as helium-filled drives and shingled magnetic recording, enhance its ability to capture demand in a sector dominated by a near-duopoly with Seagate. Seagate’s recent strong margins and profitability further underscore the HDD market’s resilience, despite broader risks like supply chain volatility and competition from SSDs.

Valuation metrics for the sector, inferred from Seagate’s elevated P/E and P/S ratios, suggest investors are paying a premium for HDD stocks, reflecting confidence in long-term growth. While Western Digital’s specific financials are not detailed, the sector’s high institutional ownership and bullish technical indicators, including a rising RSI and positive moving averages, reinforce the upward momentum. Analysts caution, however, that macroeconomic headwinds and liquidity constraints—evidenced by Seagate’s high leverage—could test the sector’s durability if demand growth slows or interest rates rise sharply.