Morgan Stanley: HDD spot prices are 4 to 7 cents per GB, yet the market is pricing them at peak levels.

S, according to Chaowang Research, that Morgan Stanley's October 20, 2026 research note indicates Seagate Technology (STX) is currently trading at $660.81, while Western Digital (WDC) is at $352.21; nearline hard disk drive (HDD) spot transaction prices range from 4 to 7 cents/GB, hybrid nearline contract prices are approximately 1.5 cents/GB; and the CY27/CY28 industry supply shortage stands at roughly 400 exabytes (EB).

Morgan Stanley assesses that the market-implied 8x P/E multiple for HDDs suggests a cycle peak in FY28, a valuation that is overly punitive; current spot prices of 4 to 7 cents/GB and a CY27/CY28 shortfall of 400 EB do not support a peak. The report reiterates an overweight rating for STX and WDC, assigning price targets of $1,200 for STX and $643 for WDC, thereby reinstating STX as the top pick for IT hardware. Morgan Stanley forecasts Seagate's December-quarter EPS at $9.54, 12% above market consensus, and Western Digital's December-quarter EPS at $5.25, 10% above consensus. WDC faces lower buy-side expectations and presents a better tactical setup ahead of its earnings release.