Key Takeaways
- WT Asset Management sold all its Western Digital, STMicroelectronics and Teradyne shares in the third quarter, its latest 13F shows.
- NVIDIA and Microsoft, both new to the filing, are now its two biggest positions.
- Analysts’ mean targets sit 53% to 68% above the prices of the three stocks it sold.
- Western Digital trades at about 13x forward earnings with revenue growth guided to speed up, which makes it the hardest sale to explain.
A fund just walked away from three chip and storage stocks that Wall Street thinks could rally more than 50%, and put the money into AI’s two biggest names.
WT Asset Management’s 13F for the quarter ended September 30, filed October 28, shows it sold every share of Western Digital (WDC), STMicroelectronics (STM) and Teradyne (TER). Its two biggest positions are now NVIDIA (NVDA) and Microsoft (MSFT), neither of which it reported at June 30. In all, it held $6.18 billion of US-listed stocks across 39 positions.
The filing doesn’t say when in the quarter the fund sold or at what price. Since June 30, the last date it reported owning them, Western Digital and Teradyne have each fallen 43% and STMicroelectronics 38%.
Western Digital Is the Hardest Sale to Explain
The fund held 784,212 Western Digital shares worth $501 million on June 30, 9.9% of its 13F stocks. By September 30, it had none.
The business is speeding up, not slowing down. Western Digital’s fiscal first-quarter revenue rose 55% to $4.38 billion in the quarter that ended October 2. It guided the next quarter to $5.1 billion, up 66% to 72%, with gross margin of 60% to 61%.
The mean target is $613, up from $128 a year ago, though it’s off its October 7 peak of $673.50. Even the lowest target, $405, sits above the $366 price, and the stock trades at about 13x forward earnings.
The worry is supply. Toshiba plans to nearly double its hard-drive capacity by fiscal 2027, news that sent Western Digital down double digits on October 2.
TIKR Tracks 26 Analysts on Western Digital. How Many Say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Western Digital, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Western Digital’s Analyst Ratings
Teradyne’s Growth Just Hit a Wall
Teradyne’s 660,196 shares were worth $319 million on June 30, 6.3% of the fund’s 13F stocks.
Its third quarter looked strong at first glance: revenue rose 70% to $1.31 billion, beating estimates, with record memory test revenue. The problem is the guide. Teradyne expects $1.25 billion to $1.35 billion for the fourth quarter, flat with the third at the midpoint, and the stock opened more than 6% lower on October 28.
The mean target is $425, up from $144 a year ago and below its late-July peak of $451. The lowest target, $340, still sits above the $274 price. But at about 26x forward earnings, Teradyne is the most expensive of the three, just as its growth slows from 70% to about 20%.
STMicroelectronics Is Growing the Slowest
The fund’s 5.76 million STMicroelectronics shares were worth $431 million on June 30, 8.5% of its 13F stocks.
STMicroelectronics’ third-quarter revenue rose 18% to $3.76 billion, and it guided the fourth quarter to $4.15 billion, about 25% above a year earlier. That’s a recovery, and its fourth-quarter guide implies faster growth than Teradyne’s roughly 20%, but its 18% third quarter was the slowest of the three. The mean target of $71.63 sits 53% above the $46.74 price, and the stock trades at about 19x forward earnings.
The Fund’s New Top Two
NVIDIA is now the fund’s largest position: 3.12 million shares worth $713 million on September 30, 11.5% of its 13F stocks. Microsoft is No. 2, with 1.18 million shares worth $607 million, or 9.8%. Since September 30, NVIDIA is down 10% and Microsoft is up 2%.
NVIDIA’s mean target of $329 is at its one-year high and 61% above the $205 price. The stock trades at about 17x forward earnings, well below its one-year average of 23.5x.
Microsoft’s October 28 report was mixed. Azure grew 48% in its fiscal first quarter, ahead of the roughly 45% Microsoft had guided. But free cash flow fell to $18.6 billion from $25.7 billion a year earlier as capital spending climbed.
The Western Digital Sale Is the One I’d Undo
If I could buy back one of the three, it would be Western Digital. It’s the cheapest on earnings, and its guidance says growth is accelerating into a 60% gross margin.
At 13x, investors are pricing those earnings as a peak, and Toshiba’s extra capacity is how a hard-drive cycle usually ends. That’s a real risk, but a lot of it is already in the price.
Teradyne is the sale I’d have made too. A flat fourth-quarter guide at 26x forward earnings is a poor mix. The stock opened more than 6% lower on the guide, though most of its 43% drop since June came before the report.
The next check is Western Digital’s December quarter, guided to $5.1 billion. If it lands there with Toshiba adding supply, the cycle has further to run. NVIDIA reports on November 17, and the fund’s next 13F, due in mid-February, will show whether it stuck with its new top two.
So What Are These Three Stocks Actually Worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what WDC, STM, and TER stocks could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
