Here’s Why Western Digital and Seagate Technology Are Falling Fast Today

Data-storage stocks were among the biggest laggards in the S&P 500 on Tuesday. (Getty Images for WIRED)

Key Points

• Data-storage stocks, top performers in the S&P 500 last quarter, experienced a significant decline during Tuesday’s tech slump.
• Western Digital’s stock rose 88% in the third quarter, making it the second-best S&P 500 stock, while Seagate jumped 64%.
• Analysts attribute Tuesday’s decline to profit-taking, despite reiterating Buy ratings for Seagate and Western Digital due to growth projections.

Data-storage stocks were among the top-performing names in the S&P 500 last quarter, but they also took the hardest hit in Tuesday’s tech slump.

Seagate Technology Holdings was the biggest laggard in the index, falling 7.9%. Western Digital sank 5.1%, putting the company on pace for its largest percent decrease since April 3, after President Donald Trump announced sweeping global tariffs, according to Dow Jones Market Data. Fellow data-storage supplier Pure Storage fell 3.6%.

The selloff snapped a remarkable run for data-storage stocks. Demand for hard disk drives at data centers has surged in recent quarters, driven by cloud and artificial-intelligence investments. In a research note last month, Morgan Stanley analysts projected the growth cycle was unlikely to peak until at least 2028.

Share prices followed suit. Western Digital was the second-best stock in the S&P 500 in the third quarter, rising 88%. Seagate came in fourth, jumping 64%. Those runs left investors with some enviable gains.

“I believe today is mainly profit taking,” said Mark Miller, an analyst at Benchmark who once worked at Seagate and at companies bought by Western Digital.

Benchmark reiterated Buy ratings for Seagate and Western Digital in a research note Tuesday, citing upbeat growth projections for data-center capacity.

Nevertheless, both stocks’ rallies “have caused investors to express concerns over valuations,” Miller noted.

That uneasiness prevailed across the tech sector Tuesday. Many of the hot names with skyrocketing share prices this year as part of the AI wave fell sharply. Semiconductor equipment leader Lam Research was down 5% and cloud giant Oracle fell 3%, to name just a couple. The iShares U.S. Technology exchange-traded fund dropped 1%.

Write to Nate Wolf at nate.wolf@barrons.com