On June 18, Western Digital rose 3.14% in after-hours trading, trading at $734.19/share with turnover of $429 million, continuing its strong upward momentum following a major Morgan Stanley upgrade.

The rally is driven by Morgan Stanley's research note highlighting that the HDD upcycle is extending significantly, with shortages now expected to persist through at least 2028. Analyst Erik Woodring raised Western Digital's target price from $488 to $650, maintaining an Overweight rating, after conducting three weeks of intensive supply chain checks across Asia including the Taiwan AI Summit, COMPUTEX, and Western Digital's Asia roadshow.

The report estimates HDD demand is growing 40%-50% annually, while supply growth is limited to 30%-35%, creating a structural gap of approximately 300-400 exabytes per year through 2028. Near-line HDD pricing currently sits below $15/TB, with vendors targeting $25-$30/TB over the next two to three years. Morgan Stanley's base-case 2028 EPS forecast is approximately 70% above consensus, with the bull case projecting roughly 10x EPS growth from 2025 to 2028. The company's CEO previously disclosed that full-year capacity is essentially fully booked, with some long-term agreements extending into 2027 and 2028.

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