Western Digital (WDC) AI Stock Analysis

• Market Cap: $91.73B
• Dividend Yield: 0.18%
• Average Volume (3M): 10.11M
• Price to Earnings (P/E): 27.2
• Beta (1Y): 2.22
• Revenue Growth: -16.35%
• EPS Growth: 316.56%
• Country: US
• Employees: 51,000
• Sector: Technology
• Sector Strength: 88
• Industry: Computer Hardware
• EPS (TTM): 2.13
• Shares Outstanding: 339,037,930
• 10 Day Avg. Volume: 9,325,915
• 30 Day Avg. Volume: 10,106,299
• PEG Ratio: -0.04
• Price to Book (P/B): 4.14
• Price to Sales (P/S): 2.31
• P/FCF Ratio: 17.10
• Enterprise Value/Market Cap: 1.06
• Enterprise Value/Revenue: 9.08
• Enterprise Value/Gross Profit: 21.26
• Enterprise Value/Ebitda: 22.57
• 1Y Price Target: $311.53
• Price Target Upside: 10.37% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 19
• EPS Forecast (FY): 8.84
• Revenue Forecast (FY): $12.51B

• Rating: 79 Outperform
• Price Target: $321.00 ▲(13.73% Upside)
• Action: Reiterated Date: 02/25/26
• Date: Action: Reiterated 02/25/26

The score is driven by strong technical momentum and a clear fundamental recovery in profitability and cash generation, reinforced by upbeat guidance and margin expansion commentary on the earnings call. Offsetting factors are valuation that is not cheap on P/E and business risks tied to cyclicality, revenue softness, and high hyperscaler concentration (plus HAMR execution timing).

Positive Factors

Improved cash generation

Western Digital's shift to sustained positive operating and free cash flow (high-teens/20%+ FCF margin) materially improves financial flexibility. Durable cash generation supports ongoing R&D, HAMR qualification costs, modest capex (4–6% run‑rate) and consistent capital returns without dependence on cyclical financing.

Scale & technology adoption

Rapid exabyte growth and conversion to higher‑density ePMR/UltraSMR increase cost per terabyte competitiveness and customer lock‑in. Higher capacity mix is structural: it raises effective ASPs per unit, lowers cost/TB, and solidifies Western Digital's position supplying hyperscalers over the next several years.

Capital structure simplification

Redeeming senior notes and converting/eliminating preferred shares reduces future interest, collateral and structural complexity. With net leverage below 1x and $3.2B liquidity, the company gains durable financial flexibility to fund HAMR scaling, sustain buybacks/dividends, and withstand cyclical downturns.

Negative Factors

Customer concentration

Reliance on hyperscalers for nearly nine‑tenths of revenue creates persistent revenue concentration risk. A small set of customers wields pricing and volume leverage, making Western Digital structurally exposed to contract renegotiations, capex cadence shifts and large single‑counterparty demand swings over quarters and years.

Top-line cyclicality

Despite margins and earnings recovering, trailing revenue contraction signals enduring cyclicality in HDD/NAND end markets. Durable margin gains can reverse if volume or ASPs fall; inconsistent top‑line trend reduces predictability of earnings, cash conversion and makes capex planning and HAMR rollouts riskier.

HAMR timing & execution risk

HAMR is strategic for next‑gen nearline capacity but remains in qualification with multi‑year ramp plans. Execution delays or higher-than-expected costs would impair long‑term competitiveness on cost/TB and could force extended pre‑ramp investments, weakening returns and exposing the company to faster technology shifts by peers.

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 data storage products, which include HDDs, SSDs, and other storage solutions. The company has a diversified revenue model with key streams coming from both Client Solutions and Data Center Solutions. Client Solutions revenue is driven by sales of consumer-oriented storage products, such as external drives and internal SSDs for laptops and desktops. Data Center Solutions revenue is primarily derived from sales of high-capacity storage systems and solutions tailored for enterprise customers and cloud data centers. Additionally, Western Digital benefits from strategic partnerships with major technology firms and cloud service providers, which helps expand its market reach and solidify its presence in emerging markets. The company's ongoing investment in research and development also plays a crucial role in driving innovation, allowing it to maintain competitive pricing and product differentiation, further contributing to its earnings.

Western Digital Financial Statement Overview

Summary

Financials show a clear cyclical rebound with sharply improved profitability and solid TTM operating/free cash flow versus 2023–2024 losses. Key offsets are declining TTM revenue (weaker top-line momentum), historically volatile returns across the cycle, and reduced equity cushion despite manageable leverage.

Income Statement

Profitability has rebounded sharply, with TTM (Trailing-Twelve-Months) showing strong gross and net margins and solid operating profitability versus the losses in 2023–2024. The latest annual period (2025) also reflects a meaningful recovery from 2024’s downturn. The key weakness is top-line momentum: TTM (Trailing-Twelve-Months) revenue is down (negative growth), highlighting ongoing cyclicality and potential volatility in demand despite improved earnings power.

Balance Sheet

Leverage looks manageable with debt under equity in both TTM (Trailing-Twelve-Months) and 2025, and the TTM (Trailing-Twelve-Months) reduction in total debt versus 2025 is constructive. Returns on equity are very strong in TTM (Trailing-Twelve-Months) and 2025, indicating a powerful earnings recovery. However, the business has shown material swings in profitability (negative returns in 2023–2024), and equity has declined versus 2024, which reduces balance-sheet cushion if the cycle turns.

Cash Flow

Cash generation has improved meaningfully: TTM (Trailing-Twelve-Months) operating and free cash flow are solid and free cash flow growth is strong, a major reversal from the negative cash flow years in 2023–2024. Free cash flow is also fairly well supported by earnings in TTM (Trailing-Twelve-Months). The main watch-out is that operating cash flow is not especially high relative to operating profit in recent periods, suggesting working-capital or timing effects that could make cash conversion uneven.

Breakdown	TTM	Jun 2025	Jun 2024	Jun 2023	Jun 2022	Jun 2021
Income Statement
Total Revenue	10.73B	9.52B	6.32B	6.25B	18.79B	16.92B
Gross Profit	4.59B	3.69B	1.77B	1.39B	5.87B	4.52B
EBITDA	4.32B	1.94B	243.00M	289.00M	3.40B	2.46B
Net Income	3.81B	1.86B	-798.00M	-1.68B	1.55B	821.00M
Balance Sheet
Total Assets	15.61B	14.00B	24.19B	24.55B	26.26B	26.13B
Cash, Cash Equivalents and Short-Term Investments	1.98B	2.47B	1.55B	2.02B	2.33B	3.37B
Total Debt	4.66B	5.08B	7.82B	8.47B	7.62B	8.72B
Total Liabilities	8.27B	8.69B	13.37B	13.58B	14.04B	15.41B
Stockholders Equity	7.34B	5.31B	10.82B	10.96B	12.22B	10.72B
Cash Flow
Free Cash Flow	2.31B	1.28B	-781.00M	-1.22B	773.00M	895.00M
Operating Cash Flow	2.67B	1.69B	-294.00M	-408.00M	1.88B	1.90B
Investing Cash Flow	-101.00M	150.00M	-27.00M	-762.00M	-1.19B	-765.00M
Financing Cash Flow	-2.89B	-1.61B	187.00M	875.00M	-1.72B	-817.00M

Western Digital Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 282.25
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

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 282.25 is above the 20-day moving average (MA) of 278.22, above the 50-day MA of 233.26, and above the 200-day MA of 131.65, indicating a bullish trend. The MACD of 13.91 indicates Positive momentum. The RSI at 56.20 is Neutral, neither overbought nor oversold. The STOCH value of 34.15 is Neutral, 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	79 Outperform	$91.73B	27.16	41.27%	0.18%	-16.35%	316.56%
NTAP	72 Outperform	$19.78B	17.38	125.35%	1.89%	2.64%	4.12%
PSTG	72 Outperform	$22.36B	194.19	9.27%	―	13.18%	-0.92%
STX	70 Outperform	$86.36B	44.78	―	1.02%	31.56%	106.00%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
SMCI	58 Neutral	$18.65B	24.95	13.19%	―	12.22%	-48.34%
HPQ	57 Neutral	$16.71B	6.87	―	5.09%	4.09%	-5.77%

Western Digital Corporate Events

Western Digital Simplifies Capital Structure After Preferred Elimination

On February 24, 2026, Western Digital eliminated its Series A Convertible Perpetual Preferred Stock by filing a Certificate of Elimination in Delaware, following the mandatory conversion of all outstanding preferred shares on February 17, 2026, returning them to authorized but unissued status and simplifying its capital structure. On February 13, 2026, the company also initiated and completed a full redemption of its 2.850% Senior Notes due 2029 and 3.100% Senior Notes due 2032, including release of related security interests after certain debt repayments on February 19 and funding of the redemption price on February 23, 2026, further streamlining its balance sheet and potentially reducing future interest and collateral obligations.

The most recent analyst rating on (WDC) stock is a Buy with a $337.00 price target. To see the full list of analyst forecasts on Western Digital stock, see the WDC Stock Forecast page.

Western Digital Converts Preferred Shares, Simplifying Capital Structure

Western Digital Corporation, which previously issued Series A Convertible Perpetual Preferred Stock in a private placement that closed on January 31, 2023, has exercised its option to convert this preferred equity into common stock. The move follows terms set in its Certificate of Designations, which allowed a mandatory conversion once specific trading price conditions were met after the three-year anniversary of the closing.

On February 17, 2026, the company converted all outstanding shares of the Series A preferred stock into common stock in accordance with those provisions. The transaction simplifies Western Digital’s capital structure by eliminating the preferred class, a step that may have implications for existing common shareholders and future financing flexibility.

The most recent analyst rating on (WDC) stock is a Buy with a $321.00 price target. To see the full list of analyst forecasts on Western Digital stock, see the WDC Stock Forecast page.

Western Digital Completes Redemption of 2026 Senior Notes

On January 5, 2026, Western Digital Corporation announced a conditional redemption of the entire outstanding principal amount of its 4.750% Senior Notes due 2026, with a formal conditional notice delivered to noteholders by the trustee on January 6, 2026. On February 5, 2026, the company deposited sufficient funds with the trustee to cover the full redemption price and accrued interest, thereby satisfying and discharging all obligations under the indenture and releasing the guarantors from their related commitments.

This transaction effectively eliminates the 4.750% Senior Notes due 2026 from Western Digital’s capital structure, simplifying its debt profile and removing associated guarantee obligations from its balance sheet. The completion of the redemption on February 5, 2026, marks a key step in the company’s ongoing management of its liabilities, with implications for its financial flexibility, interest expense profile, and the rights and obligations of holders of the redeemed notes.

The most recent analyst rating on (WDC) stock is a Buy with a $375.00 price target. To see the full list of analyst forecasts on Western Digital stock, see the WDC Stock Forecast page.