Seagate Technology Holdings (STX) and Western Digital (WDC) are poised for higher profitability as demand from artificial intelligence and the limited supply of exabytes are expected to be supportive through 2028, BofA Securities said Wednesday in a report.

Resilient pricing in the hard disk drive industry may support an upside of up to 20% in earnings estimates for both companies, BofA said.

Gross margin estimates may improve if manufacturing efficiencies help slow the increase in cost per drive, the report said.

BofA raised its price target on Seagate stock to $255 from $215 and boosted Western Digital's target to $141 from $123, while maintaining a buy rating on both.

Seagate shares rose 1.1% in recent Wednesday trading, and Western Digital gained 2%.

Price: 230.70, Change: +2.57, Percent Change: +1.13