TL;DR · 30-second read

The Short Version

Toshiba, one of only a handful of companies that still make the hard drives holding much of the world’s data, says it will build twice as many drives by its 2027 business year. It also wants to sell nearly a third of all of them.

Investors took that as a threat to rival Seagate. Its stock fell about 10% in a single day, after its value more than tripled in a year.

The reason: the giant computer buildings behind artificial intelligence need enormous storage, and tight supply let drive makers charge more. More drives could mean cheaper storage, and thinner profits for the makers.

Toshiba plans to double its hard disk drive (HDD) output by fiscal 2027 and is targeting a 30% share of the market, Simply Wall St reported on October 3, 2026. Seagate Technology Holdings (Nasdaq: STX) shares fell about 10% in a day and about 7% over the week, to a last close of $848.99.

Western Digital (Nasdaq: WDC) shares also moved lower on Toshiba’s expansion plans, Yahoo Finance reported.

Executive Summary

Toshiba’s plan has two parts that matter: a volume goal, doubling hard drive output by fiscal 2027, and a market-share goal of 30%. Together, they signal that a third manufacturer intends to grow its supply faster than the market grows. That is the scenario most likely to weaken the pricing power Seagate and Western Digital have enjoyed as AI and cloud data centers absorbed high-capacity drives.

The market’s reaction was immediate. Seagate’s one-day drop of roughly 10% came after a one-year total shareholder return above 200%, and while the stock trades at 60.6 times earnings. Peers trade at 26 times earnings. A plan with a 2027 horizon could move the stock that much because Seagate’s valuation assumes today’s margins will last.

The analytical takeaway is that the AI storage boom has not ended. Nothing in the announcement points to weaker demand. What the move shows is that hard drive pricing depends heavily on how much new capacity the few manufacturers choose to add. Seagate’s main counterargument is a shift toward its higher-capacity HAMR drives, which would let it grow margins without relying on price.

Why a Share Target Hits Scarcity Pricing Hardest

The hard drives that fill AI and cloud data centers are high-capacity “nearline” drives. They store data that must stay accessible but is not read constantly, such as training datasets, archives and backups. These drives come from a very small group of manufacturers, with Seagate, Western Digital and Toshiba at the center. In a market that concentrated, prices depend less on how much customers want and more on whether any maker adds supply faster than demand grows. The most popular bullish thesis on Seagate describes it as a position “built on physical scarcity” and names its own key risk plainly: that a supplier “loosens capacity discipline.”

Toshiba’s plan turns that risk into a stated strategy. Doubling output while targeting 30% of the market is a volume objective, and a share target can only be met by taking sales from someone else. That explains why the reaction landed on Seagate and Western Digital and not on indicators of AI demand. The announcement suggests no slowdown in data center storage needs. What changed is the assumption that supply would stay tight long enough for prices to keep rising.

Two groups feel this most directly. Cloud providers and data center operators buy drives in bulk and have been negotiating in a seller’s market. They now have a named third source to cite well before any additional Toshiba units ship. On the other side are Seagate and Western Digital, whose valuations reflect scarcity lasting for some time. The plan does not end scarcity on its own. It is a target, and its completion date is in fiscal 2027. But in a concentrated market, an expected change in supply can shift bargaining power before the actual supply arrives.

A 10% Day After a 200% Year

Seagate’s one-year total shareholder return is above 200%, and its five-year return is more than tenfold. Its price-to-earnings ratio, meaning what investors pay for each dollar of annual profit, is 60.6x. That compares with a peer average of 26x and a global tech average of 19.5x. It is also above a “fair ratio” estimate of 57.5x.

A multiple like that assumes elevated margins will persist. When a stock is priced that way, a plan with no disclosed spending figure or plant-level detail can still move it 10% in a day. Investors are not asking whether Toshiba will actually ship twice as many drives by 2027. They are asking whether the possibility shortens how long scarcity pricing lasts. The size of the drop says more about how much durability investors had priced in than about how much new supply is actually coming.

Views on what the pullback means still diverge. The leading bullish narrative puts Seagate’s fair value at $1,158.73, about 27% above its last close of $848.99. The earnings multiple tells a more cautious story. Both readings can hold at once: the stock has upside if margins stay where they are, and it is exposed if they do not.

HAMR Is the Counterargument, and It Runs on a Different Clock

HAMR, or heat-assisted magnetic recording, uses a tiny laser to briefly heat the spot on a disk being written. This lets data be packed more densely, so each drive holds more. The bull case argues that Seagate’s margins do not depend only on price. One thesis models HAMR’s share of Seagate’s mix rising from 40% to 70%. It argues that the shift “happens on a qualification schedule, not a price schedule.” Qualification is the lengthy testing process large buyers run before deploying a drive model at scale.

This is the strongest response to the supply-discipline argument. If more supply pressures prices per drive, more capacity per drive can offset some of that pressure. But the same thesis flags the counter-risk: Western Digital could close the HAMR gap faster than expected. Toshiba has framed its plan in terms of output and share. It has not said which capacity tiers or recording technologies its added units will use. That detail decides whether new Toshiba supply competes directly with the highest-capacity drives AI buyers prioritize, or mostly with lower tiers.

For storage buyers, the practical reading is to watch qualification timelines more closely than headline output figures. Extra drives only change the pricing picture once customers have tested and approved them for large deployments. The timing of those approvals, for both Toshiba’s added volume and Seagate’s HAMR ramp, will show whether this was an early signal or an overreaction.

Background

Seagate Technology Holdings provides data storage solutions in Singapore, the United States, the Netherlands and internationally. Alongside Western Digital and Toshiba, it is one of the few companies still manufacturing hard disk drives at scale. Hard drives have stayed central to data centers because they store large volumes of data cheaply, even as faster flash storage handles more performance-sensitive work.

The AI buildout has turned high-capacity hard drives into a constrained product. Tight supply has supported pricing and margins for the incumbents, and Seagate’s share price rose more than tenfold over five years. Seagate’s push into HAMR drives, which store more data per unit, has become a central part of investor debate about whether those margins can outlast the current supply squeeze.

Sources

Source: Is Seagate Technology Holdings (STX) A Bargain After Toshiba’s HDD Expansion Plan? (Simply Wall St): Seagate’s share reaction and valuation after Toshiba’s plan to double HDD output. Also: Why Toshiba’s Expansion Plans Just Sent Western Digital Stock Lower (Yahoo Finance): Western Digital’s share reaction to the same news.