Morgan Stanley has adopted a more bullish tone on storage-hardware names, raising its Seagate Technology price target to $1,200 from $1,187 while lowering Western Digital's target to $643 from $676. The firm kept Overweight ratings on both stocks and named Seagate its top pick in information technology hardware. Based on Monday's closing prices, the revised targets imply about 82% upside for Seagate and 83% for Western Digital. Analyst Erik Woodring said the market may be underestimating the hard-drive cycle and sees favorable near-term trading setups, particularly for Western Digital.
The bullish view follows last week's sharp selloff, when Seagate fell more than 18% and Western Digital lost over 16% on AI-financing concerns and competition from Toshiba's planned capacity expansion. Morgan Stanley argues HDD fundamentals are strengthening, with potential supply shortfalls around 400 exabytes in 2027 and 2028 and spot transactions priced two to five times above contracted levels. The firm expects both companies to exceed September-quarter expectations, with earnings forecasts about 12% above consensus for Seagate and 10% for Western Digital. Western Digital reports after the market closes Thursday, while Seagate reports October 27.
On Tuesday, Western Digital rose 1.31% to $356.82, while Seagate slipped 1.32% to $669.54.
Separately, Super Micro Computer jumped as much as 17% in extended trading after raising its September-quarter revenue forecast by $4 billion. The AI server maker now expects revenue of $18.5 billion to $19.5 billion, up from $14.5 billion to $15.5 billion, and lifted projected gross margins to 12% to 12.5%. The midpoint of $19 billion would represent roughly 279% growth year over year. Management cited stronger AI platform demand and an improving product and customer mix. Dell and Hewlett Packard Enterprise also rose after hours, and Evercore ISI analyst Amit Daryanani viewed the update as another encouraging sign for AI infrastructure spending.
Analysts remain cautious, however. Supermicro's forecast is preliminary and unaudited, and cash flow remains a key concern after negative free cash flow of about $7 billion in fiscal 2026. Wall Street holds a consensus Hold rating on SMCI, with analyst targets ranging from $15 to $60. Supermicro will report full results on November 3.
