Hard-drive stocks staged a sharp rebound on Monday: Western Digital surged 7%, Seagate climbed about 5%, and SanDisk edged higher. Just one session earlier, both names had been dumped more than 10% on reports of a Toshiba capacity expansion. Three Wall Street heavyweights — Bernstein, Citi, and Morgan Stanley — pushed back in unison, arguing the market overreacted and that Toshiba's plans cannot fill the hard-drive supply gap.
The trigger was a Nikkei Asia report on Friday: Toshiba plans to invest roughly 60 billion yen ($380 million) to expand its hard-disk-drive facilities in the Philippines and nearly double production capacity by fiscal 2027, which ends in March 2028, to serve AI data centers. Western Digital cratered 10.2% on Friday and Seagate tumbled alongside. By Monday's premarket, WDC had recovered about 1.7% and STX about 1.6%, with gains widening through the session. Retail sentiment on Stocktwits turned bullish over the weekend.
Bernstein said in a Saturday note that Toshiba's announcement had been misunderstood — the company is aiming to nearly double capacity by fiscal 2027, not to instantly double its share of the global HDD market. Bernstein's math: even if Toshiba doubles its exabyte output while Western Digital and Seagate each grow exabyte shipments by 25%, in line with their long-term plans, Toshiba's exabyte share would rise only from 11.2% to 16.8%. "Although significant," the firm wrote, that increase "isn't that alarming" and is nowhere near the 30% market share cited in press reports. Bernstein called the selloff a "storm in a teacup," said it would buy both stocks on the dip, and reiterated Outperform ratings with target prices of $1,350 and $770.
Citi analysts argued Toshiba's expansion is unlikely to materially ease the HDD shortage, saying the industry is under-shipping unconstrained demand "by a wide margin" and recommending buying WDC and STX on Friday's selloff. Citi analyst Asiya Merchant added that Toshiba depends on third-party suppliers for media and recording heads, which would bottleneck any rapid ramp. Morgan Stanley acknowledged the "knee-jerk reaction" in both stocks but said the HDD supply-demand gap through calendar 2028 should remain wider than Toshiba's potential capacity addition — and that it would "gladly" buy the dip.
Goldman Sachs analyst James Schneider named Seagate a top tactical chip pick ahead of earnings, forecasting 2% revenue upside and 3% guidance upside driven by hard-drive pricing and heat-assisted magnetic recording progress. Notably, Monday's rebound was largely confined to hard-drive makers — flash storage and memory peers traded essentially flat. Seagate closed at $889.48, up 4.8%.