A channel survey report released by Morgan Stanley on June 16 shows that after nearly three weeks of mapping the Asian supply chain, demand for hard disk drives (HDDs) is continuously strengthening and broadening in scope, with the shortage cycle expected to last at least until 2028. At the same time, HDD pricing is „clearly and meaningfully strengthening“. The report’s author, Erik Woodring, Morgan Stanley’s head of US tech hardware research, maintained his „overweight“ ratings on Seagate Technology and Western Digital, raising Seagate’s target price from $767 to $1,035 and Western Digital’s target price from $488 to $650. The news sent both stocks to record highs on Monday: Seagate closed up 9.43% at $1,018.8, while Western Digital rose over 16% to $653.53.
The report points out that the demand side is driven by two forces: first, core cloud services are expanding beyond expectations, coupled with new storage demand from AI reasoning and agent applications; second, the launch of new high-capacity products is further stimulating restocking. On the supply side, Morgan Stanley expects HDD demand to grow 40% to 50% annually, while supply growth is only about 30% to 35%, meaning the supply-demand gap will continue to widen. The „parabolic rise“ in NAND prices also gives HDD manufacturers the confidence to raise prices. Currently, nearline HDDs, which mainly serve data centers, have an average price below $15 per TB. Morgan Stanley’s supply chain survey shows that manufacturers aim to push prices to $25-$30 per TB in the next two to three years. Erik says that even under a base-case scenario that is more conservative than the survey results, the two companies’ EPS forecasts for fiscal 2028 are already about 70% higher than the Wall Street consensus. In the most bullish pricing scenario, Seagate and Western Digital’s EPS could grow tenfold between 2025 and 2028.