Western Digital and Seagate, which supply storage hardware for AI data centers, are seeing explosive demand and strong profit growth, with analysts favoring Western Digital's current valuation and momentum.

What happened: Both Western Digital and Seagate reported strong fiscal Q3 earnings (ended April 3). Western Digital's revenue rose 45% year over year to $3.34 billion（約5300億円）, with gross margins jumping past 50% and net income rising 516% to $3.2 billion（約5100億円）. Seagate's revenue rose 44% to $3.1 billion（約5000億円）, gross margin expanded by 1030 basis points to 46.5%, and net income rose 120% to $748 million（約1200億円）. The supply shortage has given both companies pricing power.

Why it matters: AI systems require massive amounts of data storage for training data, logs, and outputs, creating unprecedented demand from large cloud providers. Western Digital reports 100% of its 2026 hard disk drive production capacity is sold out through 2028–2029, while Seagate's nearline exabyte capacity is largely allocated through 2027. This visibility into future revenue, combined with strong cash generation, has allowed both companies to increase shareholder returns.

What to watch: Western Digital trades at lower valuations than Seagate on both trailing and forward bases and has improved its balance sheet to a net cash position. The company raised its quarterly dividend by 20% and authorized a $4 billion（約6400億円） share-repurchase program. Seagate holds a $1.1 billion（約1800億円） cash position and approved an additional $5 billion（約8000億円） stock buyback program, though it raised its dividend by only 3% this year to $0.74 per share.