Seagate and Western Digital Shares Skyrocket, What You Need To Know
Seagate (STX) and Western Digital (WDC) shares surged sharply, with both companies posting explosive revenue growth — STX up ~39% YoY and WDC up ~51% YoY in their most recent fiscal years. The AI-driven surge in data storage demand has re-rated hard disk drive makers, but the question is whether the fundamentals justify chasing the move or if the run is already priced in.
What happened
Seagate (STX) and Western Digital (WDC) shares surged sharply, with both companies posting explosive revenue growth — STX up ~39% YoY and WDC up ~51% YoY in their most recent fiscal years.
The read · Jul 9
STX and WDC have both posted ~40-50% YoY revenue surges on AI storage demand — the tension is whether the HDD upcycle has runway left to justify the valuation re-rating or whether the move has already front-run the fundamentals.
Wrong if
The pair collapses if STX re-rates sharply on an earnings beat or guidance raise that closes the EPS efficiency gap, or if WDC's NAND segment disappoints and drags WDC relative to pure-play STX.
CoverageSource: TradingView · Published here THU, JUL 9 · 11:25 AM ET · the only report in this recordHow this is decided →
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The story1 min read
Shares of hard disk drive giants Seagate Technology (STX) and Western Digital (WDC) have skyrocketed, drawing attention to a storage sector that was largely left for dead just a few years ago. Both companies have posted remarkable revenue recoveries: STX reported ~$9.1B in revenue for FY2025 (ending June 2025), up roughly 39% YoY, while WDC posted ~$9.5B, up a staggering ~51% YoY. WDC carries stronger gross margins at 38.8% versus STX's implied thinner margins, though STX delivered $6.77 diluted EPS versus WDC's $5.12 — suggesting better earnings efficiency at STX relative to revenue.
The backdrop is a massive AI-driven boom in nearline HDD demand, as hyperscalers and cloud providers scale out storage capacity to support model training and inference workloads. Both companies sit in a near-duopoly with Toshiba HDD, giving them pricing power in an upcycle. WDC also carries flash memory exposure through its NAND segment, adding another vector of cyclical recovery.
The bull case rests on continued hyperscaler capex expansion and the secular trend toward higher-capacity HDDs (e.g., HAMR/MAMR technology), which could sustain pricing and margin expansion well into 2026. The bear case is that HDD cycles have historically been violent — inventory builds and customer digestion periods can snap revenue growth quickly — and both stocks may already reflect the bulk of the upcycle in their current valuations after a large move up.
Watchers should track hyperscaler capex commentary (AWS, Azure, Google) for any signs of nearline HDD order moderation. WDC's ongoing NAND segment and potential flash business separation adds a wildcard. With earnings likely reflecting peak-cycle dynamics, the key debate is duration of the upcycle, not its existence.
The read, in fullWhy it matters
WDC's 51% YoY revenue growth and 38.8% gross margin outpace STX's trajectory on a top-line basis, while STX's higher diluted EPS ($6.77 vs $5.12) suggests tighter earnings leverage — a long WDC / short STX pair captures any near-term re-rating of WDC's margin expansion story relative to STX without requiring a directional call on the HDD cycle. The near-duopoly structure limits competitive deterioration risk within the pair. Both names are moving on the same macro tailwind, so the pair isolates relative fundamentals.
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· Published
The read above, as written. kept as written · closes shown from JUL 9 on
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4-8 weeks. Follow to be told when one lands.
▲ The case it holds
WDC's 50.7% YoY revenue growth combined with 38.8% gross margins suggests it is capturing more of the nearline HDD pricing upside and could see further multiple expansion as the NAND segment recovery compounds the HDD upcycle.
▼ The case it breaks
STX's $6.77 diluted EPS versus WDC's $5.12 on nearly identical revenue bases (~$9.1B vs $9.5B) signals that STX converts revenue to earnings more efficiently, making it the harder stock to fade on a valuation-per-dollar-of-earnings basis.
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