San Jose, March 5, 2026, 11:46 PST
- Western Digital’s CEO says certain major cloud clients have already booked orders stretching out to 2028.
- The company points out that video AI demands much greater storage compared to text or images.
- Western Digital shares dropped roughly 2% during afternoon trading.
Western Digital disclosed that major cloud clients have locked in hard drive orders running out to 2028—a level of long-term commitment unusual for what’s typically a cyclical sector. The stock slipped about 2% on Thursday. 1
Why it matters now: Data-center budgets have pivoted toward artificial intelligence lately, with a wave of investment moving beyond just text into the much heavier realm of images and video—demanding far more storage. With the hard-drive market dominated by a handful of major players, buyers are moving quickly to secure inventory up front instead of scrambling to find it down the road.
Western Digital gets a more predictable runway for pricing and production with these longer purchase commitments. Still, investor nerves linger, the memory of tech hardware’s boom-bust swings isn’t far off.
Speaking Tuesday at a Morgan Stanley tech event, Chief Executive Irving Tan pointed out that AI video chews through between 100 and 1,000 times more storage than plain text or images—a key growth lever as AI models shift to “multimodal” capability, handling video alongside text. Tan told the audience one of the firm’s five biggest hyperscalers already has orders lined up through 2028, with two others booked into 2027. “We have firm POs for all of calendar year 2026” from the top seven customers, he said. 2
Tan told the conference the company wasn’t “adding any drive unit capacity,” emphasizing a shift toward automation and higher areal density—a term the industry uses for squeezing more data onto each disk surface.
Western Digital keeps pressing ahead with bigger nearline drives designed for data centers. SMR, or shingled magnetic recording, stacks tracks on top of each other to squeeze in more data, but that method can make rewriting trickier. The company’s also developing HAMR — heat-assisted magnetic recording — which writes data tighter using heat.
Kris Sennesael, the company’s Chief Financial Officer, said the bulk of business now comes from cloud customers, while consumer and client devices have shrunk to a minor share. He mentioned stable pricing and longer-term contracts are emerging as the new normal during this transition.
Seagate’s CFO Gianluca Romano echoed the sentiment at the same conference, noting that “Video AI” demand has kicked in ahead of the company’s projections. “It’s just happening a little bit faster than what we were thinking,” he said. The company, like its rival, moves plenty of hard drives into cloud data centers. 3
Still, risks loom. If AI demand tapers off, cloud companies might hold off on rolling out new projects, burn through existing inventory, or move money around. Long lead times in this business mean choices made now might not make sense a year from today. And the emergence of new storage tech? That has the potential to throw a wrench into purchasing habits, particularly if customers land on lower-cost options for data storage and transfer.
Western Digital has wrapped up its flash business spinoff, leaving the company squarely focused on hard drives, according to a 2025 statement. The flash unit now runs independently as Sandisk. 4
Western Digital moved in February to unload a chunk of its Sandisk holding, targeting $3.17 billion from the sale as it looks to pare back debt. 5
Last month, the company bumped up its share buyback program by another $4 billion, pointing to a boost from AI server demand. 6
