Western Digital (WDC) Stock Rallies 11% on Bernstein’s Bullish Upgrade to Outperform

Key Takeaways

• Bernstein elevated Western Digital to Outperform from Market Perform, raising its price target from $170 to $340.
• A sharp 21% decline followed concerns about Google’s TurboQuant compression technology — which Bernstein argues poses zero threat to hard drive demand.
• The firm projects Western Digital and Seagate will achieve combined revenue growth of 24% CAGR between fiscal 2025 and 2030.
• Western Digital announced an extended timeline for its ePMR technology, potentially indicating a delayed shift to HAMR drives.
• Seagate remains Bernstein’s preferred stock in the segment, with its price target elevated to $620.

Despite recent volatility, Western Digital maintains a year-to-date gain of approximately 57%, showcasing resilience even through the latest correction.

Western Digital Corporation, WDC

The stock plunge was triggered when Google Research introduced TurboQuant — an advanced compression method designed to optimize KV cache during AI inference operations. Market participants worried this innovation could reduce storage hardware demand.

According to Bernstein, the market reaction was excessive and unwarranted. Western Digital had tumbled 21% from its recent peak before the analyst’s upgrade. Related companies including Seagate and Sandisk experienced similar pressure.

Upgraded Revenue Projections for Storage Industry

Bernstein has adopted a more constructive stance on the broader storage industry. The research firm now forecasts that Western Digital and Seagate will achieve a combined revenue compound annual growth rate of 24% spanning fiscal years 2025 through 2030.

This represents a substantial upgrade from earlier projections that anticipated 18.7% bits growth accompanied by 3.6% annual price erosion. The updated model incorporates 24% bits expansion with pricing holding steady.

Newman pointed to several structural growth drivers: expanding AI computational workloads, increasingly sophisticated content production, extended data retention requirements, and strengthening data sovereignty regulations that support both volume growth and pricing power.

Regarding product developments, Western Digital’s 2026 Innovation Day revealed plans to extend its ePMR technology roadmap. The company essentially prolonged the lifecycle of its existing drive architecture by one to two additional years beyond prior expectations.

Questions About HAMR Rollout Timeline

The upgrade contains an important qualification. Newman interprets Western Digital’s continued emphasis on ePMR as an implicit indication that the company’s migration to heat-assisted magnetic recording — commonly referred to as HAMR — might be progressing slower than initially anticipated.

Bernstein’s financial model anticipates Western Digital will begin scaling HAMR production in 2027, representing approximately 5% of nearline exabyte shipments during that year.

This contrasts sharply with Seagate’s trajectory, where Bernstein projects roughly 70% of nearline volume will utilize HAMR technology by 2027. Seagate continues as the firm’s preferred investment, with its price target increased to $620 from $500.

Western Digital shares climbed approximately 2.3% during Wednesday’s premarket session following the upgrade before accelerating gains throughout regular trading hours.

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