AI Storage Demand Remains Strong: Wedbush Raises Target Prices for Seagate and Western Digital Ahead of Earnings

As AI infrastructure continues to expand, enterprise demand for high-capacity storage equipment is steadily increasing. Investment firm Wedbush Securities has raised its target prices for Seagate Technology (STX-US) and Western Digital (WDC-US) ahead of their upcoming earnings reports, anticipating that both major storage providers will benefit from improved product portfolios and rising average selling prices (ASP) for hard drives, resulting in financial performance that exceeds market expectations for the latest quarter.

Wedbush analyst Matt Bryson raised Seagate's target price from $825 to $1,000, an increase of approximately 21.2%. Western Digital's target price was raised from $540 to $650, an increase of about 20.4%. The investment rating for both companies remains 'Overweight'.

Bryson stated that Seagate's upcoming quarterly earnings are expected to surpass market consensus, primarily due to improved gross margins. He believes that modest price increases, combined with a higher shipment ratio of premium products, will once again drive profitability above market expectations.

Furthermore, he noted that as new long-term supply agreements (LTAs) come into effect, Seagate's average selling price is expected to continue improving through 2027, providing sustained support for both revenue and profitability.

Regarding Western Digital, Bryson also expressed an optimistic outlook. He expects the company's current-quarter earnings to exceed market estimates as well. Compared to Seagate, he noted that because management previously provided a more conservative gross margin outlook, Western Digital has greater potential to deliver results that surpass expectations.

Bryson explained that the recent adjustments to the financial model primarily reflect a more optimistic outlook for fiscal year 2028 (FY2028), driven by continuously upward revisions in market assumptions regarding future hard drive average selling prices, which in turn improves medium- to long-term profit forecasts.

Market estimates indicate that Seagate will report its fiscal year 2026 fourth-quarter earnings on July 28. Analysts' average forecast is for earnings per share (EPS) of $5.08 and revenue of approximately $3.49 billion.

Western Digital is scheduled to release its latest quarterly earnings on August 5. The market's average estimate is for EPS of $3.30 and revenue of approximately $3.7 billion.

Market observers point out that ongoing AI model training, cloud computing, and the expansion of large-scale data centers are driving increased enterprise demand for high-capacity hard drives and data storage equipment, leading to continued improvement in the storage industry's business climate. If both companies deliver earnings and future guidance that exceed market expectations, investor confidence in the long-term growth of the AI storage supply chain could be further strengthened.