Western Digital (WDC) AI Stock Analysis

• Market Cap: $54.74B
• Dividend Yield: 0.13%
• Average Volume (3M): 10.47M
• Price to Earnings (P/E): 23.3
• Beta (1Y): 2.23
• Revenue Growth: -16.35%
• EPS Growth: 316.56%
• Country: US
• Employees: 51,000
• Sector: Technology
• Sector Strength: 88
• Industry: Computer Hardware
• EPS (TTM): 1.78
• Shares Outstanding: 341,899,300
• 10 Day Avg. Volume: 11,192,906
• 30 Day Avg. Volume: 10,468,772
• PEG Ratio: -0.04
• Price to Book (P/B): 3.96
• Price to Sales (P/S): 2.31
• P/FCF Ratio: 17.10
• Enterprise Value/Market Cap: 0.94
• Enterprise Value/Revenue: 4.28
• Enterprise Value/Gross Profit: 10.89
• Enterprise Value/Ebitda: 16.25
• 1Y Price Target: $162.37
• Price Target Upside: -0.75% Downside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 19
• EPS Forecast (FY): 7.43
• Revenue Forecast (FY): $11.60B

• Rating: 78 Outperform
• Price Target: $171.00 ▲(4.52% Upside)

Western Digital's strong financial recovery and bullish technical indicators are the most significant factors driving the stock's positive outlook. The earnings call further supports this with robust growth projections and strategic investments. However, the high P/E ratio suggests some valuation concerns, which slightly temper the overall score.

Positive Factors

Revenue Growth

The significant year-over-year revenue growth indicates strong market demand and effective sales strategies, positioning the company for sustained expansion.

Cash Flow Generation

Robust free cash flow generation enhances financial flexibility, allowing for reinvestment in growth initiatives and shareholder returns.

AI-Driven Demand

AI adoption is a structural trend boosting demand for storage solutions, ensuring long-term revenue streams and market relevance.

Negative Factors

Revenue Decline

Recent revenue decline poses a challenge to growth momentum, potentially impacting future profitability if not reversed.

Operating Expenses

Higher-than-expected operating expenses could pressure margins, necessitating tighter cost controls to sustain profitability.

Macroeconomic Uncertainties

Macroeconomic uncertainties can affect demand and supply chain stability, posing risks to consistent operational performance.

Western Digital Business Overview & Revenue Model

Company Description

Western Digital Corporation develops, manufactures, and sells data storage devices and solutions in the United States, China, Hong Kong, Europe, the Middle East, Africa, rest of Asia, and internationally. It offers client devices, including hard disk drives (HDDs) and solid state drives (SSDs) for computing devices, such as desktop and notebook personal computers (PCs), smart video systems, gaming consoles, and set top boxes; flash-based embedded storage products for mobile phones, tablets, notebook PCs, and other portable and wearable devices, as well as automotive, Internet of Things, industrial, and connected home applications; and flash-based memory wafers. The company also provides data center devices and solutions comprising enterprise helium hard drives; enterprise SSDs consisting of flash-based SSDs and software solutions for use in enterprise servers, online transactions, data analysis, and other enterprise applications; data center solutions for data storage systems and tiered storage models; and data storage platforms. In addition, it offers client solutions, such as external HDD storage products in mobile and desktop form; client portable SSDs; removable cards that are used in consumer devices comprising mobile phones, tablets, imaging systems, and cameras and smart video systems; universal serial bus flash drives for use in the computing and consumer markets; and wireless drive products used in-field back up of created content, as well as wireless streaming of high-definition movies, photos, music, and documents to tablets, smartphones, and PCs. The company sells its products under the G-Technology, SanDisk, and WD brands to original equipment manufacturers, distributors, dealers, resellers, and retailers. Western Digital Corporation was founded in 1970 and is headquartered in San Jose, California.

How the Company Makes Money

Western Digital generates revenue primarily through the sale of its storage devices and solutions. Key revenue streams include the sale of HDDs and SSDs to original equipment manufacturers (OEMs), retailers, and directly to consumers. The company also earns revenue from data center solutions, which include enterprise-grade storage systems and cloud storage products. Significant partnerships with major technology companies and cloud service providers contribute to its earnings by ensuring a steady demand for its storage solutions. Additionally, Western Digital invests in research and development to innovate and enhance its product offerings, which helps maintain its competitive edge and drive sales growth.

Western Digital Financial Statement Overview

Summary

Western Digital demonstrates a solid financial recovery with strong profitability and cash flow metrics. While revenue growth has faced challenges, the company has effectively managed its margins and cash flows. The balance sheet remains stable, though moderate leverage could pose risks in adverse conditions. Overall, the financial health of Western Digital is improving, positioning it well for future growth.

Income Statement

Western Digital's income statement shows a strong recovery with a significant improvement in gross profit margin to 39.34% and net profit margin to 21.30% in the TTM period. Despite a recent revenue decline of 9.62%, the company has managed to maintain healthy EBIT and EBITDA margins. The overall revenue growth trajectory is positive, indicating a rebound from previous periods of negative growth.

Balance Sheet

The balance sheet reflects a stable financial position with a manageable debt-to-equity ratio of 0.80 in the TTM period. Return on equity has improved significantly to 35.05%, showcasing effective utilization of equity. However, the equity ratio indicates moderate leverage, suggesting potential risks if market conditions worsen.

Cash Flow

Cash flow analysis reveals robust free cash flow growth of 51.68% in the TTM period, indicating strong cash generation capabilities. The operating cash flow to net income ratio is healthy, and the free cash flow to net income ratio of 0.83 suggests efficient conversion of earnings into cash. These metrics highlight the company's strong cash flow management.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2019	Dec 2018
Income Statement
Total Revenue	9.52B	6.32B	6.25B	16.57B	20.65B
Gross Profit	3.69B	1.77B	1.39B	3.75B	7.71B
EBITDA	1.94B	243.00M	289.00M	1.99B	5.89B
Net Income	1.86B	-798.00M	-1.68B	-754.00M	675.00M
Balance Sheet
Total Assets	14.00B	24.19B	24.55B	26.37B	29.23B
Cash, Cash Equivalents and Short-Term Investments	2.47B	1.55B	2.02B	3.46B	5.00B
Total Debt	5.08B	7.82B	7.07B	10.52B	11.17B
Total Liabilities	8.69B	13.37B	12.71B	16.40B	17.70B
Stockholders Equity	5.31B	10.82B	11.84B	9.97B	11.53B
Cash Flow
Free Cash Flow	1.28B	-781.00M	-1.22B	790.00M	3.40B
Operating Cash Flow	1.69B	-294.00M	-408.00M	1.55B	4.21B
Investing Cash Flow	150.00M	-27.00M	-762.00M	-1.27B	-1.66B
Financing Cash Flow	-1.61B	187.00M	875.00M	-1.83B	-3.90B

Western Digital Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 163.60
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WDC, the sentiment is Positive. The current price of 163.6 is above the 20-day moving average (MA) of 135.06, above the 50-day MA of 118.09, and above the 200-day MA of 70.10, indicating a bullish trend. The MACD of 12.59 indicates Negative momentum. The RSI at 73.42 is Negative, neither overbought nor oversold. The STOCH value of 89.79 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WDC.

Western Digital Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WDC	78 Outperform	$54.74B	23.34	31.48%	0.13%	-16.35%	316.56%
PSTG	76 Outperform	$31.88B	228.61	10.04%	―	11.31%	-1.30%
NTAP	72 Outperform	$23.09B	20.44	123.00%	1.83%	3.45%	9.69%
STX	70 Outperform	$58.89B	35.40	―	1.08%	31.56%	106.00%
SMCI	64 Neutral	$24.98B	32.23	12.79%	―	12.22%	-48.34%
HPQ	63 Neutral	$24.25B	9.44	―	4.40%	3.11%	-3.54%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Western Digital Corporate Events

Western Digital’s Earnings Call Highlights Robust Growth

Western Digital’s recent earnings call painted a picture of robust financial health and strategic foresight, underscored by strong revenue and earnings growth. The sentiment throughout the call was overwhelmingly positive, driven by the company’s ability to capitalize on AI-related demand and enhance shareholder value while maintaining operational efficiency despite slightly elevated operating expenses. The outlook remains optimistic, with continued demand growth and strategic investments paving the way for future success.

Western Digital Reports Strong Q1 2026 Results

Western Digital Corp. is a leading data storage company that provides innovative solutions for cloud, enterprise, and AI-driven data workloads. The company is known for its cutting-edge technology and commitment to scalable and sustainable storage solutions.