What Happened?
Shares of leading data storage manufacturer Western Digital (NASDAQ: WDC) jumped 4.6% in the afternoon session after the company announced it is immediately increasing prices across its entire range of hard disk drives (HDDs), citing unprecedented demand.
Western Digital is the third major storage manufacturer to raise prices, a move prompted by what it calls "sky-high demand for every capacity in its portfolio." This surge is reportedly driven by tech giants like Google and Oracle aggressively expanding their AI infrastructure, leading to substantial growth in demand for high-capacity storage. Industry sources indicate that lead times for these high-capacity HDDs have now stretched to almost a year. However, the company noted a switch to sea freight could add six to ten weeks to shipping times. Reinforcing the positive investor sentiment, Benchmark analysts raised their price target on the stock to $115 from $85, maintaining a Buy rating.
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What Is The Market Telling Us
Western Digital’s shares are very volatile and have had 20 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 11 days ago when the stock gained 4.5% on the news that it received bullish commentary from Wall Street, including being named a 'Top Pick' by Morgan Stanley. Morgan Stanley analyst Erik Woodring raised the firm's price target on Western Digital to $99 from $92, reiterating an Overweight rating. This decision followed meetings with company executives, which increased the firm's confidence in Western Digital's technology roadmap.
Western Digital is up 66% since the beginning of the year, and at $102.71 per share, has set a new 52-week high. Investors who bought $1,000 worth of Western Digital’s shares 5 years ago would now be looking at an investment worth $2,718.
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