diff --git a/src/watcher/INotifyWatcher.zig b/src/watcher/INotifyWatcher.zig
index 8781b37e95..65b634c566 100644
--- a/src/watcher/INotifyWatcher.zig
+++ b/src/watcher/INotifyWatcher.zig
@@ -199,7 +199,7 @@ pub fn read(this: *INotifyWatcher) bun.sys.Maybe([]const *align(1) Event) {
                 event.watch_descriptor,
                 event.cookie,
                 event.mask,
-                bun.fmt.quote(event.name()),
+                bun.fmt.quote(if (event.name_len > 0) event.name() else ""),
             });
 
         // when under high load with short file paths, it is very easy to
@@ -229,76 +229,130 @@ pub fn stop(this: *INotifyWatcher) void {
 pub fn watchLoopCycle(this: *bun.Watcher) bun.sys.Maybe(void) {
     defer Output.flush();
 
-    var events = switch (this.platform.read()) {
+    const events = switch (this.platform.read()) {
         .result => |result| result,
         .err => |err| return .{ .err = err },
     };
     if (events.len == 0) return .success;
 
-    // TODO: is this thread safe?
-    var remaining_events = events.len;
-
     const eventlist_index = this.watchlist.items(.eventlist_index);
 
-    while (remaining_events > 0) {
+    var event_id: usize = 0;
+    var events_processed: usize = 0;
+
+    while (events_processed < events.len) {
         var name_off: u8 = 0;
         var temp_name_list: [128]?[:0]u8 = undefined;
         var temp_name_off: u8 = 0;
 
-        const slice = events[0..@min(128, remaining_events, this.watch_events.len)];
-        var watchevents = this.watch_events[0..slice.len];
-        var watch_event_id: u32 = 0;
-        for (slice) |event| {
-            watchevents[watch_event_id] = watchEventFromInotifyEvent(
+        // Process events one by one, batching when we hit limits
+        while (events_processed < events.len) {
+            const event = events[events_processed];
+
+            // Check if we're about to exceed the watch_events array capacity
+            if (event_id >= this.watch_events.len) {
+                // Process current batch of events
+                switch (processINotifyEventBatch(this, event_id, temp_name_list[0..temp_name_off])) {
+                    .err => |err| return .{ .err = err },
+                    .result => {},
+                }
+                // Reset event_id to start a new batch
+                event_id = 0;
+                name_off = 0;
+                temp_name_off = 0;
+            }
+
+            // Check if we can fit this event's name in temp_name_list
+            const will_have_name = event.name_len > 0;
+            if (will_have_name and temp_name_off >= temp_name_list.len) {
+                // Process current batch and start a new one
+                if (event_id > 0) {
+                    switch (processINotifyEventBatch(this, event_id, temp_name_list[0..temp_name_off])) {
+                        .err => |err| return .{ .err = err },
+                        .result => {},
+                    }
+                    event_id = 0;
+                    name_off = 0;
+                    temp_name_off = 0;
+                }
+            }
+
+            this.watch_events[event_id] = watchEventFromInotifyEvent(
                 event,
                 @intCast(std.mem.indexOfScalar(
                     EventListIndex,
                     eventlist_index,
                     event.watch_descriptor,
-                ) orelse continue),
+                ) orelse {
+                    events_processed += 1;
+                    continue;
+                }),
             );
-            temp_name_list[temp_name_off] = if (event.name_len > 0)
-                event.name()
-            else
-                null;
-            watchevents[watch_event_id].name_off = temp_name_off;
-            watchevents[watch_event_id].name_len = @as(u8, @intFromBool((event.name_len > 0)));
-            temp_name_off += @as(u8, @intFromBool((event.name_len > 0)));
 
-            watch_event_id += 1;
+            // Safely handle event names with bounds checking
+            if (event.name_len > 0 and temp_name_off < temp_name_list.len) {
+                temp_name_list[temp_name_off] = event.name();
+                this.watch_events[event_id].name_off = temp_name_off;
+                this.watch_events[event_id].name_len = 1;
+                temp_name_off += 1;
+            } else {
+                this.watch_events[event_id].name_off = temp_name_off;
+                this.watch_events[event_id].name_len = 0;
+            }
+
+            event_id += 1;
+            events_processed += 1;
         }
 
-        var all_events = watchevents[0..watch_event_id];
-        std.sort.pdq(WatchEvent, all_events, {}, WatchEvent.sortByIndex);
+        // Process any remaining events in the final batch
+        if (event_id > 0) {
+            switch (processINotifyEventBatch(this, event_id, temp_name_list[0..temp_name_off])) {
+                .err => |err| return .{ .err = err },
+                .result => {},
+            }
+        }
+        break;
+    }
 
-        var last_event_index: usize = 0;
-        var last_event_id: EventListIndex = std.math.maxInt(EventListIndex);
+    return .success;
+}
 
-        for (all_events, 0..) |_, i| {
-            if (all_events[i].name_len > 0) {
+fn processINotifyEventBatch(this: *bun.Watcher, event_count: usize, temp_name_list: []?[:0]u8) bun.sys.Maybe(void) {
+    if (event_count == 0) {
+        return .success;
+    }
+
+    var name_off: u8 = 0;
+    var all_events = this.watch_events[0..event_count];
+    std.sort.pdq(WatchEvent, all_events, {}, WatchEvent.sortByIndex);
+
+    var last_event_index: usize = 0;
+    var last_event_id: EventListIndex = std.math.maxInt(EventListIndex);
+
+    for (all_events, 0..) |_, i| {
+        if (all_events[i].name_len > 0) {
+            // Check bounds before accessing arrays
+            if (name_off < this.changed_filepaths.len and all_events[i].name_off < temp_name_list.len) {
                 this.changed_filepaths[name_off] = temp_name_list[all_events[i].name_off];
                 all_events[i].name_off = name_off;
                 name_off += 1;
             }
-
-            if (all_events[i].index == last_event_id) {
-                all_events[last_event_index].merge(all_events[i]);
-                continue;
-            }
-            last_event_index = i;
-            last_event_id = all_events[i].index;
         }
-        if (all_events.len == 0) return .success;
 
-        this.mutex.lock();
-        defer this.mutex.unlock();
-        if (this.running) {
-            // all_events.len == 0 is checked above, so last_event_index + 1 is safe
-            this.onFileUpdate(this.ctx, all_events[0 .. last_event_index + 1], this.changed_filepaths[0..name_off], this.watchlist);
-        } else {
-            break;
+        if (all_events[i].index == last_event_id) {
+            all_events[last_event_index].merge(all_events[i]);
+            continue;
         }
-        remaining_events -= slice.len;
+        last_event_index = i;
+        last_event_id = all_events[i].index;
+    }
+    if (all_events.len == 0) return .success;
+
+    this.mutex.lock();
+    defer this.mutex.unlock();
+    if (this.running) {
+        // all_events.len == 0 is checked above, so last_event_index + 1 is safe
+        this.onFileUpdate(this.ctx, all_events[0 .. last_event_index + 1], this.changed_filepaths[0..name_off], this.watchlist);
     }
 
     return .success;
diff --git a/src/watcher/WindowsWatcher.zig b/src/watcher/WindowsWatcher.zig
index b387097662..5b2267f7ac 100644
--- a/src/watcher/WindowsWatcher.zig
+++ b/src/watcher/WindowsWatcher.zig
@@ -238,18 +238,43 @@ pub fn watchLoopCycle(this: *bun.Watcher) bun.sys.Maybe(void) {
                 // skip unrelated items
                 if (rel == .unrelated) continue;
                 // if the event is for a parent dir of the item, only emit it if it's a delete or rename
+
+                // Check if we're about to exceed the watch_events array capacity
+                if (event_id >= this.watch_events.len) {
+                    // Process current batch of events
+                    switch (processWatchEventBatch(this, event_id)) {
+                        .err => |err| return .{ .err = err },
+                        .result => {},
+                    }
+                    // Reset event_id to start a new batch
+                    event_id = 0;
+                }
+
                 this.watch_events[event_id] = createWatchEvent(event, @truncate(item_idx));
                 event_id += 1;
             }
         }
     }
-    if (event_id == 0) {
+
+    // Process any remaining events in the final batch
+    if (event_id > 0) {
+        switch (processWatchEventBatch(this, event_id)) {
+            .err => |err| return .{ .err = err },
+            .result => {},
+        }
+    }
+
+    return .success;
+}
+
+fn processWatchEventBatch(this: *bun.Watcher, event_count: usize) bun.sys.Maybe(void) {
+    if (event_count == 0) {
         return .success;
     }
 
-    // log("event_id: {d}\n", .{event_id});
+    // log("event_count: {d}\n", .{event_count});
 
-    var all_events = this.watch_events[0..event_id];
+    var all_events = this.watch_events[0..event_count];
     std.sort.pdq(WatchEvent, all_events, {}, WatchEvent.sortByIndex);
 
     var last_event_index: usize = 0;
diff --git a/test/cli/hot/watch-many-dirs.test.ts b/test/cli/hot/watch-many-dirs.test.ts
new file mode 100644
index 0000000000..dad90166ad
--- /dev/null
+++ b/test/cli/hot/watch-many-dirs.test.ts
@@ -0,0 +1,101 @@
+import { spawn } from "bun";
+import { describe, expect, test } from "bun:test";
+import { bunEnv, bunExe, forEachLine, isASAN, isCI, tempDirWithFiles } from "harness";
+import { mkdirSync, writeFileSync } from "node:fs";
+import { join } from "node:path";
+
+describe("--hot with many directories", () => {
+  // TODO: fix watcher thread exit handling so the main thread waits for the
+  // watcher thread to exit. This causes a crash inside the libc exit() function
+  // that triggers in ASAN.
+  test.skipIf(isCI && isASAN)(
+    "handles 129 directories being updated simultaneously",
+    async () => {
+      // Create initial test structure
+      const tmpdir = tempDirWithFiles("hot-many-dirs", {
+        "entry.js": `console.log('Initial load');`,
+      });
+
+      // Generate 129 directories with files
+      const dirCount = 129;
+      const maxCount = 3;
+      for (let i = 0; i < dirCount; i++) {
+        const dirName = `dir-${i.toString().padStart(4, "0")}`;
+        const dirPath = join(tmpdir, dirName);
+        mkdirSync(dirPath, { recursive: true });
+
+        // Create an index.js in each directory
+        writeFileSync(join(dirPath, "index.js"), `export const value${i} = ${i};`);
+      }
+
+      // Create main index that imports all directories
+      const imports = Array.from({ length: dirCount }, (_, i) => {
+        const dirName = `dir-${i.toString().padStart(4, "0")}`;
+        return `import * as dir${i} from './${dirName}/index.js';`;
+      }).join("\n");
+
+      writeFileSync(
+        join(tmpdir, "entry.js"),
+        `
+${imports}
+console.log('Loaded', ${dirCount}, 'directories');
+(globalThis.reloaded ??= 0);
+if (globalThis.reloaded++ >= ${maxCount}) process.exit(0);
+`,
+      );
+
+      // Start bun --hot
+      await using proc = spawn({
+        cmd: [bunExe(), "--hot", "entry.js"],
+        cwd: tmpdir,
+        env: bunEnv,
+        stdout: "pipe",
+        stderr: "inherit",
+      });
+
+      const stdout = proc.stdout;
+
+      const iter = forEachLine(stdout);
+
+      // Wait for initial load
+      let { value: line } = await iter.next();
+      expect(line).toContain(`Loaded ${dirCount} directories`);
+
+      // Trigger maxCount reload cycles
+      let reloadCount = 0;
+
+      for (let cycle = 0; cycle < maxCount; cycle++) {
+        // Update all files simultaneously
+        const timestamp = Date.now() + cycle;
+        const updatePromises = [];
+
+        for (let i = 0; i < dirCount; i++) {
+          const dirName = `dir-${i.toString().padStart(4, "0")}`;
+          const filePath = join(tmpdir, dirName, "index.js");
+
+          updatePromises.push(
+            Bun.write(filePath, `export const value${i} = ${i};\nexport const timestamp${i} = ${timestamp};`),
+          );
+        }
+
+        // Wait for all updates to complete
+        await Promise.all(updatePromises);
+
+        // Wait for reload message
+        ({ value: line } = await iter.next());
+        expect(line).toContain(`Loaded ${dirCount} directories`);
+        reloadCount++;
+      }
+
+      // Verify we got maxCount successful reloads
+      expect(reloadCount).toBe(maxCount);
+
+      // Wait for the process to exit on its own after maxCount reloads
+      const exitCode = await proc.exited;
+
+      // Should exit with 0
+      expect(exitCode).toBe(0);
+    },
+    30000,
+  ); // 30 second timeout
+});