Western Digital Slides as Investors React to New HDD Capacity Threat

Seagate (STX) and Western Digital (WDC) shares fell 9% and 7% respectively after a Bloomberg report suggested they are competing to acquire TDK’s magnetic heads business. Both companies have denied finalizing any deal. Bernstein SocGen defended the stocks, citing overstated concerns. Moody’s upgraded Seagate’s rating, expecting 30% revenue growth. STX is up 194% year-to-date but down 15% weekly.

Stock futures are down due to rising Treasury yields and oil prices, which surged on reports of potential U.S. strikes in Iran. Samsung's preliminary results missed estimates, causing memory stocks to fall. PepsiCo (PEP) beat earnings but cut profit forecasts, while Applied Digital (APLD) saw revenue surge, boosting its shares.

Western Digital (WDC) shares fell 6.78% to $411.69 on Tuesday. The decline follows reports that Seagate (STX) and Toshiba (TSHTY) are competing to acquire TDK's magnetic heads business, which supplies all three major hard drive makers. Investors worry about increased competition and thinner margins for Western Digital. Last week, Toshiba announced plans to double its hard drive output for AI data centers by 2027, further pressuring WDC and STX shares.

Seagate (STX) and Western Digital (WDC) shares fell on Tuesday due to concerns over supply-chain disruption and uncertainty around TDK's magnetic-heads unit. Both companies are major HDD suppliers benefiting from AI data-center demand. Seagate dropped 8.9% to $808.08, while Western Digital fell 6.4% to $413.16. The potential TDK deal could reshape the HDD supply chain and impact pricing power.

Western Digital (WDC) shares fell 7.28% as investors reacted to Toshiba's plan to increase hard drive capacity for AI data centers by 2027, raising concerns about future supply and price competition. The decline was exacerbated by broader tech weakness and rising Treasury yields. Despite this, WDC may benefit from long-term AI and cloud storage growth, though its earnings are cyclical and vulnerable to market swings.

Seagate (STX) and Western Digital (WDC) are competing in the AI-driven hard drive market. Toshiba plans to invest $380M to double HDD production, aiming for 30% market share. Both STX and WDC stocks fell 10% initially but rebounded as analysts noted continued undersupply. Seagate and WDC are developing high-capacity drives, with Seagate using HAMR technology. Toshiba and Seagate may acquire TDK’s magnetic-head business, crucial for the industry.