Seagate, Western Digital stocks slip as Toshiba's AI storage push rattles sector

What happened: Seagate Technology ( STX ) stock fell 5% in early trading on Tuesday, while Western Digital ( WDC ) also declined 4%.

What's behind the move: The hard disk drive sector has been volatile in recent days after Nikkei reported last week that Toshiba is preparing to ramp up production to capture a larger share of the storage market for AI infrastructure.

Competitor stocks fell on the news — but there has been skepticism in recent days that the sell-off is overblown and that Toshiba's expanded manufacturing capacity doesn't cure the shortage in drives .

In another development in the space, Bloomberg reported late Monday that Seagate and Toshiba are vying for TDK Corp.'s hard disk drive magnetic-head business amid booming demand for AI data center storage.

Toshiba began talks with TDK in the spring, while Seagate submitted a higher offer in the summer, according to the report, which cited people familiar with the matter.

What else you need to know: The developments come as the AI infrastructure build-out has fueled a shortage of memory chips, sending sector names soaring this year.

Seagate stock is up more than 200% year to date, while Western Digital has gained more than 140%.

Ines Ferre is a Senior Business Reporter for Yahoo Finance covering the US stock market, publicly traded companies, and commodities.