Key Takeaways
- Bernstein elevated Western Digital to Outperform from Market Perform, setting a $340 price target—double the previous level.
- A 21% decline followed concerns about Google’s TurboQuant compression technology—fears Bernstein characterizes as baseless regarding hard drive demand.
- The firm projects Western Digital and Seagate will achieve combined revenue growth at a 24% compound annual rate through fiscal 2030.
- Western Digital announced an extended timeline for its ePMR technology, potentially indicating delayed HAMR adoption.
- Seagate holds Bernstein’s top sector recommendation, receiving a price target increase to $620.
Western Digital has delivered approximately 57% gains year-to-date, despite the recent selloff that triggered concern among market participants.
Western Digital Corporation, WDC
The downturn originated following Google Research’s introduction of TurboQuant last week—a compression algorithm designed for the KV cache utilized during AI inference operations. Market participants worried this development would reduce storage product requirements.
Bernstein analyst Mark Newman vigorously disputed this interpretation. “There is zero impact to HDD demand,” Newman stated. He emphasized that TurboQuant’s influence on NAND flash memory, employed solely for cold cache offloading, remains minimal.
Bernstein characterized the market response as excessive. Western Digital experienced a 21% retreat from recent peaks prior to the upgrade announcement. Industry counterparts Seagate and Sandisk similarly suffered declines during this period.
Elevated Storage Sector Projections
Bernstein has adopted a more favorable stance toward the storage industry. The firm anticipates combined revenue for Western Digital and Seagate will expand at a 24% compound annual growth rate between fiscal 2025 and 2030.
This represents a substantial improvement over earlier projections that assumed 18.7% bits growth alongside a 3.6% annual price erosion. The updated forecast incorporates 24% bits growth while maintaining stable pricing.
Newman pointed to AI workloads, enhanced content creation, extended data retention requirements, and stricter data sovereignty regulations as factors supporting both demand expansion and average selling price stability.
Regarding product developments, Western Digital’s 2026 Innovation Day revealed an expanded ePMR technology timeline. The organization has essentially prolonged its established drive technology by one to two years beyond initial projections.
Questions Surrounding HAMR Adoption Speed
The upgrade contains an important qualification. Newman interpreted the ongoing emphasis on ePMR as an indirect indication that Western Digital’s adoption of heat-assisted magnetic recording—referred to as HAMR—may be progressing more gradually than initially anticipated.
Bernstein’s financial model anticipates Western Digital will begin HAMR production scaling in 2027, representing approximately 5% of nearline exabytes shipped during that period.
This contrasts significantly with Seagate, which Bernstein projects will convert roughly 70% of nearline shipments to HAMR technology by 2027. Seagate maintains its position as the firm’s preferred selection, receiving a price target elevation to $620 from $500.
Western Digital advanced approximately 2.3% during Wednesday’s premarket session following the upgrade disclosure before continuing its climb throughout regular trading hours.
