F4Q26 Earnings Preview: Reigniting The Bull Case

Research evidence excerpt

F4Q26 Earnings Preview: Reigniting The Bull Case

Idea

July 27, 2026 04:01 AM GMT

Morgan Stanley & Co. LLCMHard Disk Drives | North America Erik W Woodring

Equity Analyst

F4Q26 Earnings Preview – Erik.Woodring@morganstanley.comDylan Liu +1 212 296-8083

Research Associate

Dylan.Liu@morganstanley.com +1 212 761-4519

Reigniting The Bull Case Maya C Neuman

Maya.Neuman@morganstanley.com +1 212 761-1946

Our HDD checks continue to strengthen and we expect both Rauf Ural

STX/WDC to report strong pricing-driven beats/raises this qtr. ResearchRauf.Ural@morganstanley.comAssociate +1 212 761-5958

Expectations are growing, but we're pounding the table after

IT Hardware

this pullback and reiterate both STX/WDC as our favored OW's, North America

with STX our tactical favorite into earnings/Top Pick. Industry View Cautious

Key Takeaways

HDD fundamentals continue to strengthen, with demand visibility extending to

2032 and industry checks indicating a 300-400EB supply shortfall through 2027.

We expect STX and WDC to report near the high end of June guidance and guide

September well-above Consensus as pricing momentum remains robust.

Pricing remains the key differentiator, with CY27-CY28 discussions moving

towards $25-30/TB and spot EBs carrying a 30-40%+ premium vs. contracted

volumes.

Recent concerns around STX clean room expansion, NAND pricing, open-source

AI, and compares to memory are overdone based on our checks.

Despite elevated headline P/Es, STX/WDC trade at ~16x base case CY27 EPS and

~7x bull case CY28 EPS, for 75%+ annual EPS growth through at least 2028.

For more details on our latest HDD views, please see IT Hardware: HDDs – The Next

Leg Higher (15 Jun 2026) and Western Digital: Mgmt Meetings Highlight Customers

Seeking Visibility Into 2032 (15 Jun 2026).