Seagate and Western Digital Stocks Have Tanked on Toshiba Fears. Wells Fargo Is Still Bullish.

A recent selloff thanks to Toshiba’s growth plans has been “well overdone,” analysts argued. (Paul Faith / AFP via Getty Images)

Key Points

• Seagate and Western Digital shares fall in October over concerns over growing competition from Japanese rival Toshiba.
• Wells Fargo analysts maintain Overweight ratings for both stocks, calling the recent market selloff well overdone.
• The analysts dispute a report that Toshiba could claim 30% of the hard-drive market.

Shares of hard-drive makers Seagate Technology and Western Digital have come under pressure as concerns mount about growing competition from Toshiba . But Wells Fargo says the selloff has been exaggerated.

Seagate fell 4.9% to $657.41 on Friday, while Western Digital dropped 4.6% to $339.84 as the recent selloff extended. The stocks are down 27% and 24% in October, respectively, and both have fallen 14% over their current five-day losing streaks, according to Dow Jones Market Data.

Wells Fargo analysts maintained Overweight ratings for Seagate and Western Digital in a note Friday, even as they slashed their price targets for both stocks. They lowered their Seagate target to $865 from $1,180, and Western Digital to $450 from $730. Those freshly cut targets still represent upsides of 26% and 25% from the stocks’ closing prices on Thursday, respectively.

This month’s declines for Seagate and Western Digital—which came after a report indicated Japanese rival Toshiba plans to double its hard-drive production capacity —have been “well overdone,” the analysts said, calling Toshiba’s execution “a prove-it story.” Toshiba declined to comment to Barron’s about the report at the time.

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The analysts disputed a Nikkei report suggesting Toshiba could claim 30% of the hard-drive market by fiscal 2027, arguing that even doubling its production capacity would support only a midteens market share at best.

Investors also might have overestimated how much additional supply Toshiba plans to bring to market. Wells Fargo analysts noted that a revised report from Nikkei clarified Toshiba intends to double production capacity from fiscal 2025 levels, not fiscal 2026, as investors initially assumed. The analysts estimate the distinction represents a difference of 70 to 90 million terabytes of storage capacity.

As for the outlook for Seagate and Western Digital, their gross margins are expected to approach 70% by 2028, the analysts said. They cited continued price increases, lower production costs, and tight industry supply as key drivers of profitability.

Wells Fargo expects Western Digital’s annual revenue to grow to $29.1 billion in 2028 from $15.8 billion in fiscal 2026, while Seagate’s revenue is projected to climb to $28.2 billion from $15.3 billion over the same period.

Both stocks have jumped considerably this year, regardless of their recent drops. Seagate has surged 143% in 2026, while Western Digital has risen 99%. The companies have become two of the largest beneficiaries of the AI boom as they reap the rewards of growing demand for data storage.

Write to Ty Roush at tyler.roush@barrons.com

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