Western Digital stock jumped 7% on Tuesday after Morgan Stanley raised its price target to $650 from $488, marking a 33% increase driven by confidence in the company’s hard-drive technology roadmap for AI data centers.
Morgan Stanley analyst Erik Woodring maintained an Overweight rating and reframed Western Digital’s dual-tracked UltraSMR and HAMR roadmap as undervalued by investors, describing HAMR as a source of reliability rather than a technology gap. The upgrade extended a powerful run: WDC stock closed Monday up 16.1% at $653.53 on the initial announcement and hit an intraday high of $658.80 before trimming some gains.
The analyst also lifted per-share earnings estimates to $22.40 for next year and $43.47 for 2028, arguing Western Digital stock could double next year if its bull-case pricing assumptions play out. This optimism lands on unusually strong fundamentals. Western Digital reported Q3 FY2026 revenue of $3.34 billion, up 46% year over year, with non-GAAP gross margin crossing 50% for the first time. The company also raised its dividend by 20% to $0.15 per share.
The upgrade reflects broader momentum in storage stocks tied to AI demand. AI data centers require massive amounts of storage capacity, and Western Digital’s 2026 HDD production is fully sold out, according to CEO Irving Tan, with firm purchase orders from the company’s top seven customers and long-term agreements stretching into 2027 and 2028. HAMR technology—heat-assisted magnetic recording—promises to deliver 100TB-plus capacity drives by 2029, while UltraSMR drives targeting 40TB capacity are in customer qualifications.
Seagate Technology, Western Digital’s closest competitor, is riding the same tailwind. Morgan Stanley separately raised its Seagate price target to $1,035 from $767 on June 15, while Mizuho and Citi pushed their targets to $1,090 and $1,150, respectively. Seagate posted Q3 FY2026 non-GAAP revenue of $3.11 billion, up 44% year over year, with the data center segment accounting for 80% of total revenue.
The analyst community is divided on whether the rally reflects a genuine storage super-cycle or inflated valuations. Western Digital stock now trades at a P/E ratio of 39x, and insider net direction flags selling activity. Yet Wall Street skews bullish overall: WDC carries 21 Buy ratings against 3 Holds and 1 Sell. Investors are watching whether the stock holds above $700 as follow-on analyst notes and Computex 2026 commentary flow through the market.
Sources
- Yahoo Finance — Morgan Stanley’s 33% price-target hike, stock movement, Q3 revenue and margin data, dividend increase, analyst ratings split
- DataForSEO search results — Morgan Stanley analyst Erik Woodring’s upgrade date (June 15, 2026), price target change from $488 to $650, Overweight rating, HAMR and UltraSMR framing
- Western Digital investor relations and press releases — HAMR and UltraSMR technology roadmap, 2026 production sold out, long-term customer agreements
- Seagate earnings and analyst coverage — Seagate Q3 FY2026 revenue, data center segment revenue percentage, competing analyst price targets
