Analysts say Toshiba’s planned HDD expansion won’t be enough to ease tight supply.

  • Toshiba plans to invest roughly $380 million to nearly double HDD production capacity by fiscal 2027, but Bernstein said the market overreacted.
  • Bernstein, Citi and Morgan Stanley said HDD supply is expected to remain tight through 2028, supporting their bullish views on WDC and STX.
  • Retail sentiment on Stocktwits turned bullish on both stocks over the weekend.

Western Digital Corp. (WDC) shares rose about 1.7% in premarket trading Monday, rebounding after a 10.2% selloff on Friday sparked by concerns over Toshiba’s plans to expand hard disk drive capacity for AI data centers. Seagate Technology Holdings Plc (STX) also gained about 1.6% in premarket trading.

The selloff followed a Nikkei Asia report that Toshiba plans to invest roughly 60 billion yen ($380 million) to expand its HDD facilities in the Philippines and double production capacity by fiscal 2027. Analysts, however, said investors may have overreacted.

Bernstein Says Toshiba Impact ‘Not That Alarming’

Toshiba’s announcement was misunderstood, Bernstein said in an investor note on Saturday, noting that the company is aiming to nearly double production capacity by fiscal 2027, which ends in March 2028, rather than immediately doubling its share of the global HDD market.

If Toshiba doubles its exabyte output while WDC and STX each increase exabyte shipments by 25%, in line with their long-term plans, Toshiba’s share of exabyte capacity would rise from 11.2% to 16.8%, Bernstein said.

“Although significant,” the increase in market share “isn’t that alarming” and is well below the 30% market share cited in reports, the research firm said.

Bernstein called the reaction a “storm in a teacup” and said it would look to buy WDC and STX on the selloff. The firm reiterated its ‘Outperform’ rating on both stocks.  

HDD Supply Still Tight Through 2028

Citi analysts also argued that Toshiba’s expansion is unlikely to materially ease the HDD supply shortage.

They said the industry is currently under-shipping unconstrained demand “by a wide margin” and recommended buying WDC and STX following Friday’s selloff.

Morgan Stanley similarly acknowledged the “knee-jerk reaction” in both stocks but said the HDD supply-demand gap through calendar 2028 is expected to remain wider than Toshiba’s potential capacity expansion.

Toshiba lacks leading-edge capacities and HAMR technology, Morgan Stanley said in its note, strengthening the case for WDC and STX despite increased competition.

Retail View On STX, WDC

On Stocktwits, the retail sentiment for WDC and STX rose sharply over the weekend to ‘bullish’ as of Monday

“Couple of big analyst notes over the weekend on $WDC and $STX. Add these to your watchlist for today,” said a trader, reposting the analysts’ views. Another wrote: “$WDC Buy the dip bro, have a feeling WDC will hit back on Toshiba news by announcing WDC will be ramping up production too.”

 

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