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Western Digital
(NASDAQ:WDC)
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Rating:73Outperform
Price Target:
$395.00
▼(-12.37% Downside)
Action:Reiterated
Date:10/23/26
The score is driven by strong financial performance (improved profitability, strong cash generation, and sharply reduced leverage) and a very positive earnings outlook with expanding margins and strong demand signals. These positives are meaningfully offset by weak technicals (broadly below key moving averages with negative MACD) and the risk that recent earnings strength may be cyclical or temporarily elevated, which also limits confidence in valuation signals.
Positive Factors
Cloud Storage Demand
Strong cloud concentration and rapid nearline revenue growth demonstrate that Western Digital is aligned with durable data-center capacity needs. Expanding demand from hyperscale and enterprise customers can support multi-quarter growth, improve utilization, and strengthen the company’s position in high-capacity storage.
Negative Factors
Earnings Volatility
The sharp reversal from substantial losses to exceptionally high margins makes current earnings power less certain than the headline improvement suggests. If storage pricing, mix, or customer inventories normalize, profitability could moderate and reduce the durability of near-term earnings growth.
Read all positive and negative factors
Positive Factors
Negative Factors
Cloud Storage Demand
Strong cloud concentration and rapid nearline revenue growth demonstrate that Western Digital is aligned with durable data-center capacity needs. Expanding demand from hyperscale and enterprise customers can support multi-quarter growth, improve utilization, and strengthen the company’s position in high-capacity storage.
Read all positive factors
Western Digital Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Data provided by:
The Fly
The FlyWestern Digital (WDC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$133.31B
Dividend Yield0.15%
Average Volume (3M)9.15M
Price to Earnings (P/E)12.4
Beta (1Y)2.28
Revenue Growth20.66%
EPS Growth292.80%
CountryUS
Employees40,000
SectorTechnology
Sector Strength88
IndustryComputer Hardware
Share Statistics
EPS (TTM)28.68
Shares Outstanding374,323,270
10 Day Avg. Volume9,683,385
30 Day Avg. Volume9,151,546
Financial Highlights & Ratios
PEG Ratio0.05
Price to Book (P/B)20.98
Price to Sales (P/S)14.39
P/FCF Ratio52.96
Enterprise Value/Market Cap1.19
Enterprise Value/Revenue10.98
Enterprise Value/Gross Profit20.88
Enterprise Value/Ebitda25.41
Forecast
1Y Price Target
$591.56Price Target Upside31.24% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering19
EPS Forecast (FY)20.85
Revenue Forecast (FY)$19.34B
Western Digital Business Overview & Revenue Model
Company Description
Western Digital Corporation designs, manufactures, and markets a broad range of data storage devices and software solutions across the United States, China, Hong Kong, Europe, the Middle East, Africa, and the rest of Asia, serving an international...
How the Company Makes Money
Western Digital makes money primarily by selling storage hardware and related solutions, with revenue recognized from product shipments to OEMs, cloud/enterprise customers, distributors, and retailers. Key revenue streams include: (1) HDD revenue:...
Western Digital Earnings Call Summary
Earnings Call Date:Oct 22, 2026
(Q1-2027)
| % Change Since: |
Next Earnings Date:Feb 03, 2027
Earnings Call Sentiment Positive
The call was strongly positive, with record financial performance, robust customer demand, expanding margins, strong pricing, growing long-term visibility and progress across ePMR, HAMR and high-bandwidth technologies. The main challenges were near-term input cost increases, exabyte growth temporarily below the company's greater than 25% long-term target, higher qualification-related operating expenses and planned CapEx above the historical range. Highlights significantly outweighed lowlights.Positive Updates
Strong First-Quarter Financial Performance
Q1 fiscal 2027 revenue grew 55% year-over-year, gross margin expanded to 58% and operating margin reached 49%. EPS increased 161% year-over-year, and free cash flow was $1.4 billion.
Negative Updates
Near-Term Input Cost Increases
WD is facing input cost increases for DRAM and NAND used inside its hard disk drives because the broader supply chain is operating in a very tight environment. The company is addressing these increases through value-engineering initiatives, which management said take time to implement and qualify.
Read all updates
Q1-2027 Updates
Positive
Negative
Strong First-Quarter Financial Performance
Q1 fiscal 2027 revenue grew 55% year-over-year, gross margin expanded to 58% and operating margin reached 49%. EPS increased 161% year-over-year, and free cash flow was $1.4 billion.
Read all positive updates
Company Guidance
For the second quarter of fiscal 2027, WD expects revenue to be $5.1 billion, plus/minus $100 million, representing a 69% increase year-over-year at the midpoint; gross margin is expected to be in the range of 60% to 61%, operating expenses of $400 million to $410 million, interest and other expenses of $15 million, a tax rate of 17%, and diluted earnings per share of $5.80 plus/minus $0.20 based on a non-GAAP diluted share count of 380 million shares. The latest ePMR platform is expected to represent close to 30% of nearline shipments by the second quarter and 50% by the third quarter of fiscal 2027, while the company expects volume shipments of first-generation HAMR in the first half of calendar year 2027, qualifications with 2 additional customers during the first half of calendar year 2027, and second-generation HAMR qualifications in the second half of calendar year 2027. WD expects exabyte growth to accelerate through the rest of the fiscal year and fiscal year 2028, expects long-term nearline exabyte growth to exceed 25%, expects cost per terabyte to reduce approximately 10% year-over-year in the long run and be less than 10% down year-over-year in the near term, and expects ASP per terabyte growth to have further room to expand over the next 3, 4 quarters. Capital expenditures are expected to average 4% to 6% of revenue over a 5-year period and be modestly above that range over the next 2 years.Western Digital Financial Statement Overview
Summary
Income Statement
82
Very Positive
Balance Sheet
88
Very Positive
Cash Flow
79
Positive
| Breakdown | TTM | Jun 2026 | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 14.48B | 12.92B | 9.52B | 6.32B | 6.25B | 18.79B |
| Gross Profit | 7.62B | 6.31B | 3.69B | 1.77B | 1.39B | 6.07B |
| EBITDA | 6.26B | 5.00B | 2.47B | 460.00M | 10.00M | 3.59B |
| Net Income | 10.02B | 9.42B | 1.89B | -798.00M | -1.68B | 1.55B |
Balance Sheet | ||||||
| Total Assets | 14.24B | 13.86B | 14.00B | 24.19B | 24.55B | 26.26B |
| Cash, Cash Equivalents and Short-Term Investments | 1.31B | 1.58B | 2.47B | 1.55B | 2.02B | 2.33B |
| Total Debt | 789.00M | 1.05B | 5.08B | 7.82B | 8.47B | 7.62B |
| Total Liabilities | 4.89B | 5.00B | 8.69B | 13.37B | 13.58B | 14.04B |
| Stockholders Equity | 9.35B | 8.86B | 5.31B | 10.82B | 10.96B | 12.22B |
Cash Flow | ||||||
| Free Cash Flow | 4.29B | 3.51B | 1.28B | -781.00M | -1.22B | 773.00M |
| Operating Cash Flow | 4.86B | 3.93B | 1.69B | -294.00M | -408.00M | 1.88B |
| Investing Cash Flow | -597.00M | -429.00M | 150.00M | -27.00M | -762.00M | -1.19B |
| Financing Cash Flow | -5.00B | -4.03B | -1.61B | 187.00M | 875.00M | -1.72B |
Western Digital Technical Analysis
Negative
450.75
Price Trends
429.90
Negative
491.07
Negative
415.32
Negative
Market Momentum
-25.25
Positive
39.69
Neutral
36.07
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WDC, the sentiment is Negative. The current price of 450.75 is above the 20-day moving average (MA) of 390.19, above the 50-day MA of 429.90, and above the 200-day MA of 415.32, indicating a bearish trend. The MACD of -25.25 indicates Positive momentum. The RSI at 39.69 is Neutral, neither overbought nor oversold. The STOCH value of 36.07 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for WDC.
Western Digital Risk Analysis
Western Digital disclosed 28 risk factors in its most recent earnings report. Western Digital reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Western Digital Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $43.62B | 30.93 | 113.67% | 0.94% | 12.15% | 24.60% | |
74 Outperform | $77.95B | 29.18 | 10.87% | 0.97% | 26.63% | 130.65% | |
74 Outperform | $181.47B | 16.14 | 93.13% | ― | 175.30% | ― | |
73 Outperform | $133.31B | 12.42 | 113.77% | 0.15% | 20.66% | 292.80% | |
73 Outperform | $296.98B | 26.71 | -574.57% | 0.52% | 48.86% | 152.40% | |
70 Outperform | $146.49B | 44.31 | 348.17% | 0.46% | 34.06% | 108.45% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
WDC
Western Digital
380.88
256.19
205.47%
NTAP
NetApp
227.58
113.43
99.36%
STX
Seagate Tech
667.85
446.16
201.25%
HPE
Hewlett Packard Enterprise
60.84
37.02
155.40%
DELL
Dell Technologies
501.96
338.80
207.65%
SNDK
SanDisk Corp
1,304.84
1,129.31
643.37%
Western Digital Corporate Events
Business Operations and StrategyPrivate Placements and Financing
Western Digital Announces Redemption of 3% Convertible Notes
Neutral
Sep 14, 2026
On September 14, 2026, Western Digital announced it will redeem all $109.5 million outstanding of its 3.00% Convertible Senior Notes due 2028 on November 16, 2026, at 100% of principal plus accrued interest, after which no notes will remain and in...
Business Operations and StrategyPrivate Placements and Financing
Western Digital Restructures Convertible Debt Through Exchange Agreements
Neutral
Aug 26, 2026
On August 26, 2026, Western Digital Corporation entered into privately negotiated exchange agreements with certain holders of its 3.00% Convertible Senior Notes due 2028, covering approximately $191.0 million in aggregate principal amount. The hol...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.