Key Highlights

  • Western Digital tumbled on Friday, finishing as the second-worst stock on both the Nasdaq-100 and the S&P 500, behind only rival Seagate Technology, even as the Nasdaq-100 itself closed at a record.
  • A report said Toshiba plans to double its hard-disk drive production capacity by around fiscal 2027, focused on its Philippines plant, targeting Demand for high-capacity nearline drives used in AI data centers.
  • Western Digital CEO Irving Tan had said on an August 5 Earnings Call that the very tight Supply environment provides an opportunity for increased pricing leverage, a dynamic the Toshiba expansion threatens.
  • The damage stayed confined to hard-drive makers: Micron and SK Hynix barely moved, and a memory-focused ETF edged higher, while server makers HPE, Dell and Super Micro all climbed on AI demand.

Western Digital (NASDAQ:WDC) tumbled on Friday, finishing as the second-worst stock on both the Nasdaq-100 and the S&P 500, behind only its rival Seagate Technology. The slide came on a day when the Nasdaq-100 closed at a record. The reason was a single report from Japan. A report said Toshiba plans to double its hard-disk drive production capacity by around fiscal 2027, with the expansion centred on its plant in the Philippines. Toshiba is targeting demand for high-capacity nearline drives used in AI data centers and is aiming for a much larger share of the market by capacity, according to the reports. Some headlines put the Investment at about $380 million to $400 million.

Why the News Hit So Hard

Western Digital and Seagate dominate the hard-drive market along with Toshiba. Over the past year, the explosion of AI data has pushed demand for mass storage well ahead of supply, giving the two US makers unusual pricing power.

Western Digital chief executive Irving Tan has spoken openly about that advantage. In the very tight supply environment that we're in, that provides us an opportunity for increased pricing Leverage as well, he said on the company's August 5 earnings call.

Seagate's Leadership has made a similar point. Chief executive Dave Mosley said on an April call that the total number of units is not really increasing. Seagate has also said its nearline capacity is nearly fully allocated through 2027.

A major competitor doubling output threatens that supply discipline, and with it the pricing power that has supported margins. Investors who had priced in years of tight supply moved quickly to reassess.

How Far It Fell

Reports varied on the exact size of the drop, depending on the time of the print. One closing tally put Western Digital at about $415.29, while another showed it near $405.69. Either way, only Seagate fared worse on the index, making it one of the steepest single-session declines among large technology stocks on Friday.

The damage, however, stayed confined to hard-drive makers. Micron and SK Hynix barely moved, and a memory-focused ETF edged higher. SanDisk, which makes flash memory rather than spinning disks, slipped modestly.

A Rally That Left Storage Behind

The selloff stood out against a strong market. A weak September jobs report, showing just 29,000 new jobs against expectations of about 84,000, cut expectations for another Fed rate hike in October. Chipmakers and mega-cap tech surged, with Nvidia hitting a record high during the session. The Nasdaq-100 closed at a record 30,807.93, up 306.37 points.

Treasury yields, however, reversed to close higher after an early drop, leaving the 10-year near its highest level since 2002.

The broader hardware complex largely shrugged off the news. Server makers Hewlett Packard Enterprise, Dell and Super Micro Computer all climbed, as did network-storage firm NetApp after announcing new AI products at its Insight conference.

Watching Toshiba's Timeline and Pricing Response

Investors will look for confirmation and detail from Toshiba itself, including timing, the size of the investment and how quickly new capacity could reach customers. Western Digital has projected Revenue of $4.0 billion to $4.2 billion for its fiscal first quarter of 2027, and any update on pricing and allocation from either US maker will be scrutinised. The Fed meets on October 27-28, and the broader earnings season begins with PepsiCo on October 8 and the big banks on October 13 and 14.