Agentic AI & Unstructured Data: A Growth Catalyst for Western Digital?

The rapid adoption of Agentic AI across industries is driving a growing demand for storing unstructured data. Western Digital Corporation (WDC) is already leveraging Agentic AI to gain measurable efficiencies, helping to accelerate and enhance its product development processes. These AI agents, tailored for specific tasks, from enterprise chatbots to engineering support, are creating new use cases and generating data at an unprecedented rate.

While still in the early stages, these trends are advancing swiftly across industries worldwide. As data becomes increasingly vital to AI-driven innovation, the demand for scalable storage continues to rise. HDDs remain unmatched in cost efficiency and reliability, forming the core of the global data infrastructure and delivering exceptional value for large-scale storage in an AI-enabled future.

Amid these dynamics, demand for WDC’s products continues to grow. The company stays focused on disciplined capacity management while meeting long-term market needs with reliable, high-quality, higher-capacity offerings. Shipments of its newest PMR drives—reaching up to 26 terabytes in CMR and 32 terabytes in UltraSMR—more than doubled sequentially, surpassing 1.7 million units in the June quarter. This achievement reflects one of the fastest qualification and ramp-up cycles in Western Digital’s history.

Western Digital Corporation Price and Consensus

Western Digital Corporation price-consensus-chart | Western Digital Corporation Quote

Furthermore, the rapid growth of AI is accelerating the company’s platforms business, which delivers high-density systems that maximize drive performance and capacity. This business is gaining traction with infrastructure providers and is well-positioned to serve the increasing number of native AI companies lacking dedicated storage teams.

In the last reported quarter, WDC’s revenues increased 30% year over year to $2.61 billion, driven by strong demand for high-capacity HDD storage supporting cloud and generative AI workloads. It also announced an ambitious outlook for the fiscal first quarter, projecting a 22% year-over-year revenue growth to $2.7 billion (+/- $100 million), anchored by surging demand for nearline HDDs fueled by AI workloads.

How Rivals Stack Up Against WDC

Western Digital goes head-to-head with industry heavyweights like Seagate Technology Holdings plc (STX) and Pure Storage (PSTG) in the race for storage and data dominance.

Based in Dublin, Ireland, Seagate is the leading provider of data storage technology and infrastructure solutions. STX and WDC are fiercely competing as AI and cloud demand grow. A key driver of Seagate’s growth is the ongoing implementation and expansion of its HAMR technology, which aims to increase areal density and support next-generation storage solutions. These technological advances are vital for meeting the rising demand for high-capacity storage in hyperscale data centers, AI training workloads and decentralized edge environments.

In the last reported quarter, Seagate reported non-GAAP revenues of $2.44 billion, up 30% year over year, driven by strong demand from cloud, AI and edge computing for scalable, reliable, high-density storage. Seagate’s guidance for the first quarter of fiscal 2026 remains optimistic but cautious due to evolving tax and policy environments. Management expects first-quarter revenues of about $2.5 billion (+/- $150 million). At the midpoint, this suggests a 15% year-over-year growth.

Based in Mountain View, CA, Pure Storage provides software-defined all-flash solutions that are uniquely fast and cloud-capable for customers. Its key products include FlashArray for block storage (databases, applications, VMs) and FlashBlade for unstructured data workloads such as AI and HPC. FlashBlade, an all-flash array for unstructured data, delivers multi-petabyte performance and supports AI and HPC workloads.

With cyber threats rising, the firm also expanded its partnership with Rubrik to offer enhanced protection for unstructured data. This solution improves threat detection, data management and recovery capabilities that are critical in today’s ransomware-prone environment. Despite macroeconomic uncertainties, management expects revenues to grow 11% to $3.5 billion for fiscal 2026, with product margins stabilizing in the mid-60s, supported by strong demand for the E family, FlashArray C and easing QLC flash prices.

WDC Price Performance, Valuation and Estimates

In the past year, shares have gained 18.4% against the Zacks Computer-Storage Devices industry’s fall of 11%.

In terms of forward price/earnings, WDC’s shares are trading at 11.59X, lower than the industry’s 17.82X.

The Zacks Consensus Estimate for WDC’s earnings for fiscal 2026 has been revised up 14% to $6.50 over the past 60 days.

Currently, Western Digital sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here

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This article originally published on Zacks Investment Research (zacks.com).

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