Western Digital jumped as much as 9% Monday before paring to close up about 6%, among the biggest gainers in an S&P 500 that closed at another record. The stock has now more than doubled this year, riding the same AI-infrastructure wave that snapped the chip names back to start the week — only this time the demand isn’t for compute. It’s for the drives that hold what the models learn from.
The catalyst was a wall of raised targets. Cantor Fitzgerald lifted its price target to $900 from $660, tying the call to a multi-year, supply-constrained AI cycle across semiconductors. Bank of America went to $732, citing tight hard-disk-drive supply, firm pricing, and exabyte shipments growing faster than the company’s own 25% long-term guide. Melius Research started coverage at Buy with the boldest number on the board — $1,050 — after a 20%-plus pullback it framed as a gift, pointing to AI storage and a coming wave of “physical AI.”
Underneath the targets is a pricing turn. After two brutal years, memory and hard-drive prices are recovering as AI data centers scale — and storage, unlike GPUs, was nobody’s favorite trade going in. That is changing fast: SK Hynix’s record Nasdaq listing Friday will put the memory boom in front of every institution at once. Western Digital’s last quarter — roughly $3.3 billion in revenue at a 45% gross margin — is the kind of operating leverage that makes analysts reach for four-figure targets.
Our take: The knock on this rally has been its narrowness — one trade, a handful of chipmakers, everyone else left out. Storage broadening in is the opposite of that, and it’s healthy. But be honest about what you’re buying: memory is the most cyclical corner of tech, and the same operating leverage that has Melius drawing $1,050 runs just as hard in reverse when supply catches up with demand. These targets don’t assume a good year. They assume a good cycle — years of tight supply and firm pricing. That has happened before. So has the bust that always follows it.
What to watch
- The pricing data. Hard-drive and NAND contract prices are the whole thesis. Any sign of supply catching up turns a $1,050 target into a cautionary tale.
- SK Hynix’s debut Friday. The biggest US listing in history is a memory maker. Its order book is the cleanest read on how much AI-storage paper institutions actually want.
- Western Digital’s next guide. Management’s exabyte-shipment outlook will either validate the “faster than 25%” calls or deflate them.
- Breadth. If the AI trade keeps widening past chips, Monday’s narrow record starts to look like a foundation instead of a warning.