Western Digital's stock gained 16% after Morgan Stanley raised its price target to $650, citing a widening hard-disk-drive shortage driven by AI and cloud expansion. Demand is growing 40% to 50% annually against supply growth of only 30% to 35%, while rising NAND flash prices make high-capacity hard drives more economically attractive, supporting pricing power.
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Morgan Stanley analyst Erik Woodring maintained an Overweight rating and raised his price target for Western Digital to $650 from $488 on June 15, citing a widening hard-disk-drive shortage. Western Digital shares gained 16% that day, leading the S&P 500. Bank of America reiterated Buy with a $732 target on July 1.
Why it matters
Demand for high-capacity hard drives is growing 40% to 50% annually against supply growth of only 30% to 35%, driven by cloud expansion and AI inference workloads. Rising NAND flash prices also make high-capacity hard drives more economically attractive for large datasets, supporting more predictable pricing. Analyst focus has shifted from unit volumes toward pricing power and data-center demand visibility.
What to watch
The thesis depends on supply discipline and workload growth; if customers delay deployments, reuse existing capacity, or shift their storage mix, tightness could ease. Western Digital develops high-capacity hard disk drives used in cloud data centers, enterprise systems, video applications, and consumer storage.
Western Digital has become a beneficiary of the AI infrastructure buildout, particularly because cloud providers and data centers require enormous storage capacity for training and inference workloads. The supply-demand imbalance that Woodring identified—with demand outpacing supply by roughly 10–20 percentage points annually—creates a favorable environment for pricing power, a shift in analyst focus from volume growth to margin expansion.
The role of NAND flash pricing adds another layer to this story. As NAND becomes more expensive, high-capacity hard drives become the more economically rational choice for storing large datasets, creating a structural floor under demand that extends beyond the typical cyclical swings in storage markets. However, the durability of this advantage depends on workload patterns and customer behavior remaining stable; any significant shift in how companies manage or deploy their storage infrastructure could quickly erase the current supply tightness and pressure pricing.
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