Cloud Spending and AI Workloads Push Western Digital (WDC) Higher

Western Digital Corporation (NASDAQ:WDC) is included among the 20 Best Performing Dividend Stocks in 2025.

According to a report by CNBC, Morgan Stanley analyst Erik Woodring sees several near-term catalysts lining up for Western Digital Corporation (NASDAQ:WDC). He pointed to upcoming events such as the company’s Innovation Bazaar, Investor Day, and its next earnings release early next year as potential drivers for the stock. From Woodring’s perspective, the hard disk drive market remains one of the strongest areas within the tech hardware space he covers. Customer demand has continued to improve, not weaken, which stands out in a sector that often moves in cycles. That backdrop led Morgan Stanley to raise its price target on Western Digital to $228 from $188, reflecting the company’s strong exposure to cloud capital spending. Woodring also reiterated that Western Digital remains the firm’s top pick, citing a rare mix of healthy end markets, solid pricing power, and multiple near-term catalysts. The stock’s performance backs up that view. Shares have surged more than 280% in 2025, effectively quadrupling over the year.

While Western Digital Corporation (NASDAQ:WDC) does produce solid-state drives that rely on chips to store data, the company is best known for its traditional hard disk drives. These products use spinning disks and are designed to store massive amounts of data, often measured in terabytes, making them well-suited for large-scale data center use.

That focus is showing up in the numbers. In the most recent quarter, revenue climbed 27% to $2.82 billion. Management has been clear about where margins can improve. Selling higher-capacity storage into data centers tends to be more profitable, especially as AI-focused customers demand larger and more expensive drives to handle growing workloads.

Looking ahead, revenue is expected to rise about 23% in fiscal 2026. Growth is projected to slow to around 13% in 2027, though that still reflects expansion rather than contraction. The company’s structure also changed earlier this year. In February, Western Digital spun off its flash memory business into Sandisk. The standalone company now carries a market value of roughly $35 billion, which is more than half of Western Digital’s own valuation.

Western Digital Corporation (NASDAQ:WDC) develops and supplies data storage devices and solutions. Its hard disk drive products serve a wide range of customers, from individual users and small offices to large enterprises and public cloud providers.

While we acknowledge the potential of WDC as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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