tl;dr
Western Digital and Seagate Technology surge amid AI-driven demand, with Morgan Stanley upgrading price targets as data storage becomes critical to the digital economy.
The resurgence of hard drive stocks has captured the attention of investors, with Western Digital and Seagate Technology experiencing significant gains amid a surge in demand fueled by artificial intelligence (AI) advancements. Shares of Western Digital, a leading data storage company, have more than doubled since the start of 2025, reflecting robust investor confidence. On Monday, the stock surged over 9% to around $116, nearing an all-time high, while Seagate Technology climbed nearly 5% to $227, just a fraction below its record close. These movements come as Morgan Stanley analysts elevate their price targets, signaling continued optimism for the sector.
Morgan Stanley’s analysis highlights a pivotal shift in the data storage landscape, driven by the escalating demands of AI and cloud computing. The bank’s researchers argue that the current upturn in demand for hard drives is far from a temporary blip, citing sustained investment in cloud infrastructure and the need for vast data retention to support AI initiatives. “We are still in the middle of this upturn,” the analysts noted, emphasizing that the growth trajectory for data storage companies could extend well into the future.
The catalyst for this momentum lies in the exponential rise of AI applications, which require immense computational power and storage capacity. As tech giants ramp up their AI projects, the need for reliable, high-capacity storage solutions has become critical. Western Digital, in particular, has been positioned as a standout player, with Morgan Stanley upgrading its price target to $171—a 60% upside from its recent closing price. Seagate’s target was raised to $265, reflecting a 22% potential gain. These revisions underscore the analysts’ belief that the sector remains undervalued despite its recent performance.
For investors, the implications are clear: the data storage sector is no longer a niche market but a cornerstone of the digital economy. The S&P 500’s best-performing stocks in 2025 include Western Digital and Seagate, a testament to the sector’s resilience and growth potential. However, the rapid ascent of these stocks also raises questions about sustainability. While AI-driven demand is expected to remain strong, external factors such as regulatory shifts or economic downturns could pose risks.
Despite these uncertainties, the consensus among analysts is bullish. The interplay between AI innovation and storage infrastructure suggests a long-term opportunity for companies that can adapt to evolving technological demands. As the digital age accelerates, the demand for data storage is likely to remain a key driver of growth, with Western Digital and Seagate at the forefront of this transformation. Investors are now watching closely to see if this momentum can withstand broader market fluctuations and continue to deliver returns in the years ahead.