Shares of Western Digital (WDC) surged 5.43% during pre-market trading on Tuesday, rebounding sharply from the prior session's decline. The rally was fueled by a significantly raised price target from BNP Paribas and broader strength across semiconductor stocks.

BNP Paribas hiked its target price on Western Digital from $1,050 to $1,275, implying an upside of more than 130% from the current levels. The upgrade reflects continued optimism around AI-driven enterprise storage demand and improving pricing dynamics ahead of the company's fiscal fourth-quarter earnings report, which is scheduled for release after Tuesday's market close. Consensus estimates call for earnings of $3.24 per share, and Western Digital has a history of beating expectations, having surpassed estimates in seven of the past eight quarters.

The broader chip sector also rallied in the pre-market, with names like ON Semiconductor and Wolfspeed jumping 7% and 6%, respectively, while Western Digital's peers including Micron Technology and SanDisk also posted gains. The positive sector sentiment, combined with the BNP Paribas upgrade, triggered a short-covering rebound for Western Digital, which had fallen over 4% in the prior session.