Seagate, Western Digital Face Supply Risks as AI Demand Drives Capacity Expansion

Seagate Technology Holdings Plc. (NASDAQ:STX) and Western Digital Corp. (NASDAQ:WDC) remain major beneficiaries of AI-driven storage demand, but both stocks have come under pressure as investors reassess valuations, future supply growth and the financing burden behind the broader AI infrastructure buildout. • Western Digital stock is feeling bearish pressure. Why is WDC stock falling? Storage Stocks Retreat After Massive Rally Memory and hard-disk stocks have fallen sharply over the past week on heavy trading volume, giving back part of the multi-hundred-percent gains they posted earlier in 2026. Seagate and Western Digital also traded lower amid a broader technology and semiconductor selloff. Supply Growth and Competition Raise Pricing Concerns Reports that Toshiba plans to double HDD manufacturing capacity for AI data centers by fiscal 2027 have raised concerns that additional supply could eventually pressure pricing. Developments from China’s ChangXin Memory Technologies have also added to broader caution across memory and storage stocks. Wall Street scrutiny has increased as well, with firms including UBS lowering price forecasts amid questions about near-term supply-demand conditions. See More: Top Momentum Stocks AI Demand Still Supports the Long-Term Story Despite the pullback, Seagate and Western Digital remain up roughly 110% to 150% in 2026. Strong data-storage demand and tight supply have pushed HDD pricing higher, while large-scale spending by cloud providers and hyperscalers has increased demand for high-capacity drives. AI inference workloads and agentic applications are generating growing amounts of data that require storage, supporting demand for the companies’ HDD products. Hyperscaler Spending Brings Financing Risk The scale of AI investment also creates another potential pressure point. UBP estimates five hyperscalers will spend about $820 billion on capital expenditures in 2026, above their roughly $750 billion in combined operating cash flow. The firm expects that spending to climb to $1 trillion-$1.3 trillion in 2027, potentially creating a funding gap that operating earnings alone may not cover. Hotter-than-expected U.S. inflation has added to those concerns by increasing expectations for further Federal Reserve rate hikes and potentially raising the cost of financing large AI infrastructure projects. STX, WDC Price Actions: Seagate Technology shares were down 5.08% at $655.71 and Western Digital shares were down 4.70% at $339.71 at the time of publication on Friday, according to Benzinga Pro data. Photo via Shutterstock Read Also: Taiwan Semiconductor Holds the Cards As NVIDIA, Apple and AMD Battle for Limited AI Chip Capacity