Western Digital and Seagate rebound as analysts call Toshiba capacity selloff overdone

WDC climbed 7% to $442.44 and STX rose 5% to $891.76 on October 5, as analysts pushed back on fears that Toshiba's hard-drive expansion would flood the market. The move recovered part of a sharp drop on Friday, October 2, when Seagate fell about 10% to $849.79 and Western Digital about 7% to $429.45 after reports that Toshiba plans to roughly double capacity at a facility in the Philippines, an investment of about 60 billion yen, or roughly $380 million, by fiscal 2027.

The worry was oversupply rather than shortage: more capacity from a third producer could weaken pricing for the two market leaders. Bernstein called the selloff a "storm in a teacup" and reiterated Outperform ratings on both stocks, Citi said hard drives are under-shipping demand "by a wide margin," and Morgan Stanley described the drop as a "knee-jerk reaction," arguing that the supply gap through 2028 remains wider than Toshiba's expansion. Goldman Sachs, in a separate call, named Seagate a top tactical pick and kept Western Digital at Neutral.

The rebound came on a strong day for technology stocks, with Western Digital among the Nasdaq's biggest gainers. Seagate remains about 18.7% below its June high of $1,094 even after gaining roughly 209% this year, so the selloff and rebound played out at elevated levels.

What to watch: how quickly Toshiba can actually ramp, given its reliance on outside suppliers for media and recording heads, and whether Bernstein's projection of Toshiba's share rising from 11.2% to 16.8% starts to show up in pricing commentary from Western Digital and Seagate.