Morgan Stanley Elevates Western Digital (WDC) and Seagate (STX) as Leading Hardware Plays for 2026

TLDR Morgan Stanley selected Western Digital and Seagate as premier IT hardware investments, highlighting AI infrastructure and data center expansion as primary catalysts Western Digital shares surged 489% in twelve months, powered by 28% revenue expansion and unprecedented 46.1% gross profit margins Fiscal 2026 Q2 revenue reached $3.02 billion, representing 25% annual growth, with full-year production capacity secured by major hyperscalers Western Digital divested a $3.17 billion SanDisk position in February 2026, deploying proceeds toward reducing long-term obligations Shares have retreated approximately 16% from peak levels amid broader technology sector weakness Western Digital emerged as a standout performer in the hardware space throughout the previous twelve months. Between March 2025 and March 2026, the company’s stock price skyrocketed approximately 489%, climbing from $44 to $259 per share. This remarkable ascent stemmed from robust top-line expansion coupled with margin improvement. Annual revenues increased 28% to reach $10.73 billion, while net profit margin expanded dramatically from 15% to 35.4%. Morgan Stanley recently designated both Western Digital and Seagate Technology as its highest-rated IT hardware equities. The financial institution attributed these selections to accelerating artificial intelligence infrastructure investments and expanding cloud data center deployments. Western Digital Corporation, WDC Seagate delivered fiscal Q2 revenue of $2.83 billion alongside earnings per share of $3.11, surpassing Wall Street projections on both metrics. In response to these results, Cantor Fitzgerald increased its valuation target for the storage manufacturer. Regarding Western Digital, Morgan Stanley emphasized increasing conviction surrounding AI capital expenditure trends as the central thesis. The firm’s analysts also identified memory chip pricing dynamics and recent share price fluctuations as monitoring points for investors. AI Demand Drives ...