Western Digital's stock soared 8.98% during intraday trading on Tuesday, leading a significant rally in the storage sector.

The surge was primarily driven by intensifying demand for storage products from artificial intelligence infrastructure buildouts. SK Hynix's Chairman stated that AI semiconductor demand is expected to grow 60% to 100% year-over-year next year, while major manufacturers have virtually no substantial capacity expansion plans, pointing to a widening supply-demand gap. Morgan Stanley noted that third-quarter data center memory prices rose at least 25% quarter-over-quarter, characterizing memory as an increasingly critical bottleneck in AI infrastructure—a structural constraint expected to persist for years.

Simultaneously, a wave of institutional target price upgrades boosted market confidence. Multiple investment banks raised their outlook on Western Digital, with Citi lifting its target to $800, BNP Paribas to $660, and UBS to $560, signaling strong institutional conviction and driving visible capital inflows. The broader AI trade also showed signs of a robust comeback during the session, contributing to the sector-wide advance.