Seagate Stock and Western Digital Tumble as Investors Worry AI Shortage Will Ease

Seagate and Western Digital shares tumbled Friday after Nikkei reported that Toshiba plans to double its production capacity for drives used in AI data centers in fiscal 2027. The report hit two of the biggest beneficiaries of the artificial-intelligence boom, according to Barron's, which framed the selloff as a "reality check" for the group.

Toshiba is a Japanese rival to both Western Digital and Seagate, and the capacity plan it disclosed targets the same AI data-center drive market that has lifted the two U.S. names. A doubling of output from a direct competitor lands squarely on the supply-scarcity premise behind the AI hardware trade. The market's reaction suggests investors read the news as a signal that tight supply could ease, which would pressure pricing power and the premium multiples attached to the group.

Interpretation, not reported fact: the selloff reflects fear about the supply-demand balance more than any change in AI demand itself. Nothing in the report points to weaker data-center spending; the concern centers on more competing capacity arriving in fiscal 2027.

Barron's noted the drop may present an opportunity for patient investors, a view that treats Friday's move as an overreaction to a plan that is still prospective rather than an immediate supply shock.