Western Digital Corporation (WDC): A Bull Case Theory

We came across a bullish thesis on Western Digital Corporation on r/AIPortfolios by manojs. In this article, we will summarize the bulls’ thesis on WDC. Western Digital Corporation's share was trading at $284.67 as of February 19th. WDC’s trailing and forward P/E were 26.61 and 34.36 respectively according to Yahoo Finance.

Western Digital Corporation develops, manufactures, and sells data storage devices and solutions based on hard disk drive (HDD) technology in the United States and internationally. WDC has emerged as a compelling opportunity following a strong Q2 FY26 earnings beat, AI-driven guidance, and a clear innovation roadmap that reinforces its positioning within the accelerating data infrastructure cycle. The company reported revenue of $3.02 billion and EPS of $2.13, both ahead of expectations, while guiding Q3 revenue to $3.2 billion (+40% YoY) and EPS to $2.30, signaling sustained momentum as cloud demand continues to scale.

AI-related workloads are a central driver, with cloud customers now accounting for 89% of revenue, as hyperscalers expand storage capacity amid HDD supply constraints and significant NAND price increases of roughly 55–60%, creating favorable pricing dynamics. Management further strengthened the long-term thesis during its recent Innovation Day, unveiling next-generation AI-optimized HDD technologies targeting capacities above 100TB using HAMR, alongside indications of multi-year demand commitments from leading customers, which improves visibility into future growth.

Technically, the stock reflects improving sentiment, rising about 35% over the past month with bullish momentum indicators including a MACD crossover and an RSI of 62, while a sustained breakout above $290 could trigger additional short covering. Analyst confidence has also increased, with price targets moving into the $325–$420 range, supported by capital allocation initiatives such as a $4 billion buyback authorization and a dividend, which signal management’s confidence despite a temporary dip linked to CEO share sales. With a target price of $299.78 versus a prior close of $283.70, implying about 5.7% near-term upside and roughly 8.5% potential based on momentum, WDC appears positioned for further gains.

Previously, we covered a bullish thesis on Seagate Technology Holdings plc (STX) by fortitudelkw in January 2025, which highlighted the company’s positioning to benefit from storage demand through HAMR technology and hyperscaler adoption. STX's stock price has appreciated by approximately 278.04% since our coverage. manojs shares a similar view but emphasizes on Western Digital Corporation’s momentum, AI guidance, capital returns.

Western Digital Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 84 hedge fund portfolios held WDC at the end of the third quarter which was 74 in the previous quarter. While we acknowledge the risk and potential of WDC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than WDC and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.