Quick Summary
- Bernstein elevated Western Digital’s rating to Outperform from Market Perform, simultaneously raising its price target to $340âdouble the previous forecast.
- A 21% decline in shares was triggered by investor anxiety surrounding Google’s TurboQuant compression technologyâconcerns Bernstein dismisses as unfounded for HDD demand.
- The firm projects Western Digital and Seagate’s combined revenues will expand at a 24% compound annual growth rate through fiscal 2030.
- Western Digital announced an extended timeline for its ePMR technology platform by one to two years, potentially indicating a delayed HAMR rollout.
- Seagate continues as Bernstein’s preferred sector investment, with an upgraded target of $620 per share.
Despite the recent turbulence, Western Digital maintains approximately 57% gains year-to-date.
Western Digital Corporation, WDC
The share price tumble commenced following Google Research’s introduction of TurboQuantâa compression technology designed for AI inference KV cache optimization. Market participants worried this innovation would erode storage product demand.
Bernstein’s Mark Newman firmly rejected this interpretation. “There is zero impact to HDD demand,” Newman stated emphatically. He further clarified that TurboQuant’s influence on NAND flash memory remains minimal, as it’s utilized solely for cold cache offloading.
Bernstein characterized the market’s response as excessive. Western Digital’s valuation had contracted 21% from recent peaks prior to this upgrade. Industry counterparts Seagate and Sandisk experienced similar pressure.
Elevated Growth Projections for Storage Industry
Bernstein has adopted a more optimistic stance toward the entire storage landscape. The investment firm anticipates combined revenue for Western Digital and Seagate will accelerate at a 24% annual compound rate spanning fiscal 2025 through 2030.
This represents a substantial upgrade from earlier projections of 18.7% bits expansion coupled with 3.6% annual price erosion. The refreshed model anticipates 24% bits growth alongside stable pricing dynamics.
Newman identified several catalysts driving both demand volume and pricing power: AI computational workloads, enhanced content generation, extended data retention requirements, and increasingly stringent data sovereignty regulations.
Regarding product development, Western Digital’s 2026 Innovation Day revealed an expanded ePMR technology trajectory. The corporation effectively extended its established drive architecture by an additional one to two years beyond prior expectations.
Questions Surrounding HAMR Adoption Timeline
The upgrade contains an important qualification. Newman interpreted the continued emphasis on ePMR as an implicit indication that Western Digital‘s shift toward heat-assisted magnetic recordingâabbreviated as HAMRâcould be progressing slower than initial projections suggested.
Bernstein’s financial modeling anticipates Western Digital will commence HAMR volume production in 2027, achieving approximately 5% penetration of nearline exabyte shipments during that fiscal year.
This timeline contrasts dramatically with Seagate’s trajectory, which Bernstein forecasts will convert roughly 70% of nearline volumes to HAMR technology by 2027. Seagate maintains its position as the firm’s preferred sector selection, with an elevated price objective of $620, increased from $500.
Western Digital shares climbed approximately 2.3% during Wednesday’s premarket session immediately following the upgrade disclosure, with momentum building throughout regular trading hours.
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