Key Highlights
- Bernstein raised Western Digital to Outperform from Market Perform, setting a new $340 price target—double the previous figure.
- A 21% decline in shares stemmed from concerns about Google’s TurboQuant compression technology—worries Bernstein considers unfounded for HDD demand.
- The firm projects Western Digital and Seagate’s combined revenues to expand at a 24% compound annual growth rate between fiscal 2025 and 2030.
- Western Digital announced an extended timeline for its ePMR technology, potentially indicating a delayed shift to HAMR technology.
- Seagate remains Bernstein’s preferred stock in the storage sector, with its price target increased to $620.
Despite recent volatility, Western Digital maintains approximately 57% gains year-to-date following a sharp but temporary decline.
Western Digital Corporation, WDC
The stock’s decline originated after Google Research introduced TurboQuant last week—a compression technology designed to optimize KV cache during AI inference processes. Market participants worried this innovation would reduce storage product demand.
Bernstein analyst Mark Newman firmly rejected this interpretation. “There is zero impact to HDD demand,” Newman stated. He emphasized that TurboQuant’s influence on NAND flash memory, utilized solely for offloading inactive caches, remains minimal.
Bernstein characterized the market response as excessive. Western Digital had dropped 21% from its recent peaks before receiving the upgrade. Competitors Seagate and Sandisk experienced similar pressure.
Enhanced Projections for Storage Industry
Bernstein has adopted a more optimistic stance on the broader storage market. The investment firm now anticipates combined revenues for Western Digital and Seagate to climb at a 24% compound annual rate spanning fiscal years 2025 through 2030.
This represents a significant upgrade from earlier projections of 18.7% bits expansion coupled with a 3.6% yearly price erosion. The updated forecast incorporates 24% bits growth alongside stable pricing dynamics.
Newman identified AI computing workloads, enhanced content generation, extended data preservation requirements, and stricter data sovereignty regulations as positive factors supporting both volume growth and pricing power.
Regarding product development, Western Digital’s 2026 Innovation Day revealed an expanded ePMR technology timeline. The corporation effectively extended its conventional drive technology by one to two years beyond initial expectations.
Questions Surrounding HAMR Rollout Timeline
The upgrade contains an important qualification. Newman interpreted the ongoing emphasis on ePMR as an indirect indication that Western Digital‘s shift toward heat-assisted magnetic recording—commonly referred to as HAMR—might be progressing slower than initially anticipated.
Bernstein’s financial model anticipates Western Digital will commence HAMR production scaling in 2027, achieving roughly 5% of nearline exabyte shipments during that period.
This contrasts significantly with Seagate, which Bernstein projects will transition approximately 70% of its nearline volumes to HAMR technology by 2027. Seagate continues as the firm’s preferred investment, with its price objective elevated to $620 from $500.
Western Digital climbed approximately 2.3% during Wednesday’s premarket session immediately following the upgrade announcement, with momentum building throughout regular trading hours.
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