But Seagate and Western Digital are among the least sexy companies swept up in the AI euphoria. Hard disk drives trace their origins to the 1950s, when they stored five megabytes of data and weighed more than 2,000 pounds. Today, personal computers have hard drives with up to two terabytes of storage and that weigh around 1.5 pounds or less. And the companies that make them are focused on developing storage solutions that have become critical in training large language models, which requires massive amounts ...

Core Viewpoint - Western Digital announced an increase in prices across its hard disk drive product line due to unprecedented demand for its products, leading to a 5% jump in its shares during early market action [2]. Group 1: Company Actions - The company is increasing prices for its hard disk drive products [2]. - This decision is driven by unprecedented demand for every capacity in its product portfolio [2]. Group 2: Market Reaction - Following the announcement, Western Digital's shares experienced a 5% increase in early trading [2].

Summary of Western Digital Conference Call Company Overview - **Company**: Western Digital (NasdaqGS: WDC) - **Event**: Goldman Sachs Communicopia and Technology Conference - **Date**: September 10, 2025 Key Industry Insights - **Demand-Supply Dynamics**: The demand environment is strong and improving, with a misconception about a significant demand-supply imbalance. Supply is tight, but Western Digital believes it can meet demand effectively [6][9] - **Growth Forecast**: The storage business is projected to grow at a compound annual growth rate (CAGR) of 15% to 23% from 2024 to 2028, driven by AI advancements [7] - **Areal Density**: Growth will primarily come from increasing areal density rather than unit capacity. Current average capacity is around 21-22 terabytes per unit, with plans to increase to 36 and eventually 44 terabytes [8][12] Pricing and Market Conditions - **Stable Pricing Environment**: The average selling price (ASP) per terabyte has remained stable, with fluctuations of about ±1% over recent quarters. Long-term agreements (LTAs) with major customers provide visibility into pricing stability [13][14] - **Customer Commitments**: Four out of five largest customers have purchase orders for all of fiscal 2026, indicating strong demand and pricing stability [14] Competitive Landscape - **HDD vs. SSD**: Approximately 80% of installed storage capacity is hard disk drives (HDD), with HDDs being six times lower in acquisition cost and 3.6 times lower in total cost of ownership (TCO) compared to SSDs. Both HDD and SSD markets are growing [19][20][21] - **Market Share**: Western Digital is focused on customer relationships rather than market share, emphasizing quality and reliability in their products [22][23] Technology and Product Development - **EPMR and HAMR Technologies**: Ultra-SMR technology accounts for 40-45% of nearline shipments, expected to rise to 50% by the end of 2025. The next generation of EPMR is set for qualification in 2026, with HAMR technology ramping in 2027 [24][25][28][30] - **Quality Assurance**: Emphasis on ensuring quality and reliability before ramping up production of new technologies [27][30] Financial Performance - **Revenue Composition**: Cloud business constitutes approximately 90% of total revenue, while client and consumer segments account for about 10%. The latter is expected to grow but at a slower rate than cloud [33] - **Gross Margins**: Current gross margins are in the low 40s, with potential for further improvement driven by stable pricing, cost reductions, and a favorable product mix [37][38][39] - **Debt and Capital Return**: The company has a net debt of $2.6 billion with a target leverage ratio of 1 to 1.5. Plans for capital return include a dividend program and a $2 billion share buyback initiative [48][50] Strategic Outlook - **Long-term Growth**: Western Digital is positioned well for future growth, particularly in the AI and data-centric cloud markets, with strong customer engagements and a focus on technological advancements [32][34][43]