Surging Another 10% Pre-Market, Western Digital and Seagate Hit Record Highs Together as Morgan Stanley Warns HDD Shortage to Extend to 2028

TradingKey - In Tuesday's US premarket trading session, Western Digital ( WDC) saw its stock price surge 9.3% to $714; Seagate Technology ( STX) closely followed with a premarket gain of 7.2%, trading at $1,092. If this momentum continues into the official market open, both companies' stock prices will hit all-time highs.

Source: TradingView

Source: TradingView

In the previous trading session, Western Digital rose over 16% to close at $653.53, while Seagate Technology closed up 9.43% at $1,018.80.

The catalyst for this rally was the latest IT hardware industry report released by Morgan Stanley ( MS) analyst Erik Woodring and his team.

Over the past three weeks, they intensively visited Asian markets—from the Taiwan AI Summit and COMPUTEX to Western Digital's Asian roadshow—bringing back first-hand research data that disrupted market expectations: the global shortage cycle for hard disk drives (HDDs) will last far longer than previously estimated, persisting until at least 2028, while industry pricing power is rapidly shifting toward the supply side.

Based on this assessment, Morgan Stanley significantly raised its price target for Seagate Technology from $767 to $1,035, and for Western Digital from $488 to $650, while maintaining an "Overweight" rating for both companies.

Woodring emphasized in the report: "Our research clearly shows that the HDD industry's upcycle is lengthening, shortages are more severe than expected, and suppliers' determination to raise prices is far more resolute than the market imagines."

Data shows that current HDD demand is expanding at an annual rate of 40% to 50%, while supply growth is only 30% to 35%, causing the supply-demand gap to widen continuously.

The core driver behind the demand explosion is the exponential growth of the AI industry—unprecedented storage demand from cloud data centers, combined with massive data storage needs generated by AI inference and agent applications, has once again made traditional hard drives a hot commodity.

More importantly, the "parabolic rise" in NAND flash prices has further highlighted the cost advantages of HDDs in large-scale storage scenarios, giving manufacturers the leverage to raise prices.

Supply chain research indicates that the price of nearline HDDs commonly used in data centers is currently around $15 per TB, but manufacturers have clear plans to increase the price to $25 to $30 per TB within the next 2 to 3 years.

Even under conservative estimates, the fiscal year 2028 earnings per share (EPS) for Western Digital and Seagate Technology will be 70% higher than the current Wall Street consensus; under the most optimistic pricing scenario, the EPS of both companies could even achieve a tenfold growth between 2025 and 2028.