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Western Digital (WDC)
NASDAQ:WDC

Western Digital (WDC) AI Stock Analysis

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Western Digital

(NASDAQ:WDC)

Rating:63Neutral
Price Target:
$66.00
▼(-0.12%Downside)
Western Digital's overall stock score reflects a mix of strengths and challenges. Financial performance and valuation are positive, indicating recovery and potential undervaluation. Technical analysis shows bullish momentum but warns of overbought conditions. The earnings call and corporate events contribute positively, supporting long-term growth prospects.
Positive Factors
Capital Returns
Western Digital announced that the Board of Directors has authorized a $2bn share repurchase program effective immediately.
Stock Valuation
There is over 30% upside to the new $78 price target, indicating a favorable risk/reward ratio.
Technology Competitiveness
WDC's technology competitiveness is seen as a positive factor influencing the stock.
Negative Factors
Market Valuation
The market is underappreciating Western Digital with shares trading at a significant discount compared to its peers.
Technology Development
Western Digital is at least 12 months behind peer Seagate Technology in HAMR technology.

Western Digital (WDC) vs. SPDR S&P 500 ETF (SPY)

Western Digital Business Overview & Revenue Model

Company DescriptionWestern Digital Corporation (WDC) is a leading global provider of data storage solutions that enable businesses and consumers to capture, preserve, access, and transform an ever-increasing diversity of data. The company operates primarily in two key sectors: Data Center Devices and Solutions, and Client Devices and Solutions. Its core products include hard disk drives (HDDs), solid state drives (SSDs), and flash storage solutions, catering to a wide range of markets, including enterprise data centers, cloud computing, personal computing, and mobile devices.
How the Company Makes MoneyWestern Digital makes money through the sale of its data storage products and solutions to various sectors, including enterprises, cloud service providers, and individual consumers. The company's revenue streams are primarily derived from its two main product groups: HDDs and SSDs. HDDs are a significant revenue source, serving traditional storage needs in data centers and personal computing, while SSDs and flash memory products cater to the growing demand for faster and more efficient storage solutions in enterprise and consumer electronics. Additionally, Western Digital has established strategic partnerships with major tech companies and OEMs, which help expand its market reach and drive sales. The company also invests in R&D to innovate and enhance its product offerings, maintaining competitiveness in the rapidly evolving storage technology market.

Western Digital Earnings Call Summary

Earnings Call Date:Apr 30, 2025
(Q3-2025)
|
% Change Since: 63.00%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong cloud revenue growth and high gross margins, along with strategic debt reduction and the initiation of a dividend. However, there were declines in consumer and client segments, and concerns about potential tariff impacts. The positive aspects slightly outweigh the challenges due to strong demand and financial performance.
Q3-2025 Updates
Positive Updates
Strong Cloud Revenue Growth
Cloud revenue represented 87% of total revenue at $2.0 billion, down 4% sequentially but up 38% year-over-year, driven by the strength of the product portfolio.
High Gross Margin
Non-GAAP gross margin for the fiscal third quarter was 40.1%, a 1.7 percentage point improvement sequentially, ahead of guidance.
Successful Debt Reduction
Western Digital redeemed $1.8 billion of 2026 senior notes, strengthening the balance sheet.
Initiation of Quarterly Dividend
Announced a quarterly dividend of $0.1 per share in fiscal Q4, reflecting confidence in the business's long-term cash-generating ability.
Data Center Demand Strength
Strong demand from hyper-scale customers, with long-term agreements extending through the first half of calendar year 2026.
Negative Updates
Decline in Consumer and Client Segments
Client revenue was down 2% and consumer revenue was down 13% sequentially, primarily due to lower unit shipments and pricing.
Potential Tariff Impact
Acknowledged uncertainty and potential demand impact in the enterprise and certain parts of the distribution and retail business due to tariffs and global trade tensions.
Company Guidance
During Western Digital's third quarter fiscal 2025 conference call, the company provided guidance for the upcoming fiscal fourth quarter, projecting revenue to be $2.45 billion, plus or minus $150 million. The gross margin is expected to be between 40% and 41%, with operating expenses anticipated to slightly increase to a range of $330 million to $340 million. This increase is attributed to variable compensation, new hires, and increased research and development investments. The company also expects interest and other expenses to be around $70 million and a tax rate between 8% and 10%. Earnings per share (EPS) are projected to be $1.45, plus or minus $0.20, based on approximately 360 million shares outstanding. Additionally, it was highlighted that fiscal year 2026 will be a 53-week year, impacting the first fiscal quarter with an additional week.

Western Digital Financial Statement Overview

Summary
Western Digital shows signs of financial recovery with improved profitability and cash flow. However, revenue decline and historical volatility in earnings pose risks. The balance sheet reflects moderate leverage, and strong ROE, but potential concerns about sustainability remain.
Income Statement
62
Positive
Western Digital's income statement shows a mixed performance. The TTM gross profit margin stands at 18.09%, indicating moderate profitability. The net profit margin of 15.41% is impressive compared to the previous year's negative margin, highlighting a significant improvement in profitability. However, revenue has declined by 17.90% compared to the previous year, posing a potential concern. The EBIT margin of 17.51% reflects operational efficiency, yet the EBITDA margin of 0.25% suggests limited earnings before depreciation and amortization.
Balance Sheet
58
Neutral
The balance sheet reveals a debt-to-equity ratio of 1.42, indicating a moderate level of financial leverage. Return on equity (ROE) is strong at 31.79%, driven by recent profitability improvements, but it might not be sustainable given past negative net incomes. The equity ratio stands at 31.63%, showing a decent proportion of assets financed by equity, though lower than some peers in the industry.
Cash Flow
65
Positive
Cash flow analysis indicates solid performance with a free cash flow growth rate of 209.48%, reflecting improved cash generation and fiscal management. The operating cash flow to net income ratio is 0.80, suggesting strong cash earnings support. The free cash flow to net income ratio of 0.52 further demonstrates adequate cash flow relative to profitability, indicating good liquidity management.
BreakdownTTMJun 2024Jun 2023Sep 2022Sep 2021Sep 2020
Income Statement
Total Revenue14.44B13.00B12.32B18.79B16.92B16.74B
Gross Profit5.33B2.94B1.89B5.87B4.52B3.78B
EBITDA2.92B324.00M-400.00M3.60B2.32B1.93B
Net Income1.64B-798.00M-1.71B1.55B821.00M-250.00M
Balance Sheet
Total Assets16.37B24.19B24.43B26.26B26.13B25.66B
Cash, Cash Equivalents and Short-Term Investments3.48B1.88B2.02B2.33B3.37B3.05B
Total Debt7.33B7.43B7.07B7.02B8.72B9.57B
Total Liabilities10.96B13.14B23.55B14.04B15.41B16.11B
Stockholders Equity5.41B10.82B10.85B12.22B10.72B9.55B
Cash Flow
Free Cash Flow854.00M-781.00M-1.22B773.00M895.00M177.00M
Operating Cash Flow1.31B-294.00M-408.00M1.88B1.90B824.00M
Investing Cash Flow162.00M-27.00M-762.00M-1.19B-765.00M278.00M
Financing Cash Flow111.00M187.00M875.00M-1.72B-817.00M-1.51B

Western Digital Technical Analysis

Technical Analysis Sentiment
Positive
Last Price66.08
Price Trends
50DMA
52.26
Positive
100DMA
47.65
Positive
200DMA
48.74
Positive
Market Momentum
MACD
3.82
Negative
RSI
87.60
Negative
STOCH
93.38
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 66.08 is above the 20-day moving average (MA) of 59.83, above the 50-day MA of 52.26, and above the 200-day MA of 48.74, indicating a bullish trend. The MACD of 3.82 indicates Negative momentum. The RSI at 87.60 is Negative, neither overbought nor oversold. The STOCH value of 93.38 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WDC.

Western Digital Risk Analysis

Western Digital disclosed 29 risk factors in its most recent earnings report. Western Digital reported the most risks in the "Finance & Corporate" 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

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$21.49B18.90108.51%1.94%5.02%22.19%
77
Outperform
$28.98B26.8021.03%82.10%6.35%
76
Outperform
$18.61B153.209.76%10.85%30.85%
WDWDC
63
Neutral
$23.05B12.5628.45%0.15%21.22%
63
Neutral
$34.07B6.13-11.73%1.80%5.33%-18.31%
HPHPQ
61
Neutral
$24.42B10.0284.33%4.45%2.08%-12.41%
STSTX
61
Neutral
$31.71B21.59-109.27%1.93%36.29%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
WDC
Western Digital
66.08
6.87
11.60%
HPQ
HP
26.00
-8.00
-23.53%
NTAP
NetApp
107.26
-20.29
-15.91%
STX
Seagate Tech
149.44
48.82
48.52%
SMCI
Super Micro Computer
48.56
-41.37
-46.00%
PSTG
Pure Storage
56.93
-8.24
-12.64%

Western Digital Corporate Events

Executive/Board ChangesBusiness Operations and Strategy
Western Digital Appoints Kris Sennesael as New CFO
Positive
May 8, 2025

On May 6, 2025, Western Digital‘s Board of Directors appointed Kris Sennesael as Executive Vice President and Chief Financial Officer, effective May 12, 2025. Sennesael, with over 25 years of experience in finance and management in the semiconductor and technology sectors, will lead Western Digital’s global finance organization. His appointment is expected to strengthen the company’s position by balancing investment for innovation and growth with operational efficiency to create sustainable, long-term shareholder value.

Delistings and Listing ChangesBusiness Operations and Strategy
Western Digital Completes Flash Business Separation
Neutral
Apr 7, 2025

On February 21, 2025, Western Digital completed the separation of its Flash business into a new independent company, Sandisk Corporation, which now trades on the Nasdaq under the symbol ‘SNDK’. This strategic move means Western Digital will no longer consolidate Sandisk’s financial results, and historical results will be reported as discontinued operations starting in the third quarter of fiscal 2025, impacting the company’s financial reporting and potentially its market positioning.

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.Date of analysis: Jun 25, 2025