Western Digital's stock surged 5.26% during the pre-market session on Wednesday, marking a significant rebound for the data storage company. The move follows a period of pressure on memory and storage stocks driven by concerns over new AI efficiency technologies.

The sharp rise comes after Bernstein upgraded Western Digital's rating from "Market Perform" to "Outperform" and dramatically raised its price target from $170 to $340. Analysts led by Mark Newman stated that fears surrounding Google's TurboQuant algorithm—which reduces memory usage in AI systems—are excessive. Bernstein's report emphasized that the technology "should have zero impact on HDD demand and negligible impact on NAND demand," creating what they view as an attractive entry point after recent declines.

Fund manager Patrick Kelly of Alger Focus Equity Fund highlighted Western Digital as a key infrastructure play benefiting from AI growth, noting that "data is exploding and AI makes the data more valuable." He pointed out that Western Digital now derives nearly 90% of its revenue from cloud customers thanks to AI demand, leading to more stable pricing and strong demand fulfillment without significant cash raises. The combination of analyst confidence and strong underlying AI-driven demand fundamentals appears to be driving investor optimism toward the stock.