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New: Instantly spot drawdowns, dips, insider moves, and breakout themes across Maps and Screener.
We can attribute this to "The Seagate Effect."
Western Digital's longtime rival had excellent news to report.
Western Digital (NASDAQ: WDC) stock was a winner by association on Wednesday, thanks to the latest performance of its long-standing rival. After market hours, its fellow computer storage specialist, Seagate Technology, delivered quarterly results that far exceeded expectations. With that, Western Digital's shares coasted to a nearly 11% gain that day.
Seagate published its fiscal second-quarter figures just after market close on Tuesday, with both revenue and headline profitability growing at double-digit percentage rates. Specifically, the top line expanded by almost 22% to over $2.8 billion, while net income in accordance with generally accepted accounting principles (GAAP) advanced at a very robust 76% to hit $593 million. Both metrics easily topped the consensus analyst estimates.
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Image source: Getty Images.
Compounding that, Seagate posted new records for both gross and operating margin.
In its earnings release, Seagate highlighted the highly positive impact of artificial intelligence (AI) on its business. AI functionalities bolster both the creation and the overall value of data and, in the process, necessitate higher-performance storage solutions. Like Seagate, Western Digital is a high-profile, veteran purveyor of such products.
Although market players were a little too eager to assume that Western Digital is riding the wave just as well as its longtime competitor, it's unquestionably subject to the same market dynamics. On that basis alone, I'd be bullish on the company's future.
However, we should hold off until Thursday -- Western Digital is scheduled to release its own fiscal second quarter numbers then, and we'll get a clearer picture of how well it's doing in the midst of the AI gold rush.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Western Digital. The Motley Fool has a disclosure policy.
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