Key Stats for WDC Stock
- This-Week Performance: 7%
- 52-Week Range: $51 to $554
- Valuation Model Target Price: around $590
- Implied Upside: 11%
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What Happened?
Western Digital Corporation stock rose about 7% this week, finishing near $531 per share as investors continued to reward storage companies tied to AI infrastructure, cloud demand, and tighter hard-drive supply. The market is treating WDC less like a plain hardware stock and more like a key storage supplier for AI data centers, where hard disk drives, or HDDs, remain a cost-efficient way to store massive amounts of data. WDC is being compared most directly with Seagate Technology, its closest large hard-drive rival, while Micron and SanDisk help frame the broader memory and storage trade.
The stock moved higher this week because fresh analyst target hikes reinforced the view that Western Digital is benefiting from the AI-driven storage upcycle. Barclays raised its price target to $620 from $450 and kept an Overweight rating, while Evercore ISI raised its target to $575 and kept an Outperform rating, reflecting stronger confidence in WDC’s demand outlook, pricing power, and margin expansion. The bullish updates followed Western Digital’s recent Q3 results, where revenue rose 45% year over year to $3.34 billion, non-GAAP gross margin reached 50.5%, non-GAAP EPS came in at $2.72, and free cash flow totaled $978 million.
At JPMorgan’s recent Global Technology, Media and Communications Conference, CFO Kris Sennesael said Western Digital now expects HDD exabyte demand, a measure of storage capacity, to grow more than 25% annually over the next 3 to 5 years, above its prior mid-teens view before AI pushed expectations higher. He said hyperscaler demand is becoming “stronger for longer,” with AI training, inferencing, agentic AI, and physical AI all creating more data that needs persistent storage on hard drives. Western Digital also said customers are providing better multi-year visibility through long-term agreements extending into 2027, 2028, and in some cases 2029, while 40-terabyte ePMR drives are set to ramp in the second half of 2026 and 44-terabyte HAMR drives are planned for 2027.
Recent ownership updates added another layer of support. HighTower Advisors increased its Western Digital stake by 63.4% in the fourth quarter to 35,293 shares valued at about $6 million, while Bleakley Financial Group and Williamson Legacy Group also opened new positions. Legal & General trimmed its stake by 3.1%, but institutions still own about 93% of WDC, suggesting the stock remains heavily held by large investors even after its sharp rally.
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Is WDC Undervalued?
Under valuation assumptions, the stock is modeled using:
- Revenue Growth (CAGR): 33%
- Operating Margins: 43%
- Exit P/E Multiple: 19x
Western Digital looks modestly undervalued based on the model, with a target price of around $590 implying about 11% total upside from the model’s last close price of $531.
The revenue growth assumption depends on cloud and AI storage demand continuing to expand, as training, inference, and agentic AI workloads create more data that needs low-cost, reliable storage.
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The margin assumption depends on tight HDD supply, stronger price per terabyte, and a richer mix of high-capacity drives, which can turn higher demand into faster earnings growth.
The next 12 months will likely come down to whether Western Digital can convert this upcycle into durable free cash flow through hyperscaler demand, disciplined capacity, and continued margin strength.
At current levels, Western Digital appears modestly undervalued, with future performance driven by AI data growth, HDD pricing, cloud customer demand, and management’s ability to keep margins near current high levels.
How Much Upside Does WDC Stock Have From Here?
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- Revenue Growth
- Operating Margins
- Exit P/E Multiple
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