Western Digital forecast second-quarter earnings above Wall Street estimates on Thursday, betting on higher demand for its data storage products as cloud providers increase data center capacity.

The company also increased the quarterly cash dividend on its common stock by 25% to $0.125 per share, sending its shares up 10% in extended trading.

Data storage solutions firms, such as Western Digital and Seagate Technology, are benefiting from massive demand for high-capacity hard disk drives.

This surge is fueled by the AI boom and expanding cloud infrastructure, as cloud providers rely on these devices to store the vast amount of data required to train AI models.

"Western Digital continues to execute well in a strong demand environment driven by growth of data storage in the cloud," CEO Irving Tan said in a statement.

On an adjusted basis, the company expects second-quarter revenue to be $2.9 billion, plus or minus $100 million, above analysts' average estimate of $2.82 billion, according to data compiled by LSEG.

It projects second-quarter adjusted earnings per share to be $1.88, plus or minus 15 cents, above estimates of $1.71.

Rival Seagate Technology also forecast second-quarter revenue and profit above consensus estimates on Tuesday, betting on robust demand for its storage devices.

Western Digital posted first-quarter revenue of $2.82 billion, beating estimates of $2.73 billion.

On an adjusted basis, the San Jose, California-based company earned $1.78 per share in the first quarter, compared with estimates of $1.58 apiece.