With Analysts Calling for Western Digital to Double Earnings, the WDC Stock Rally Isn’t Over Yet

Western Digital (WDC) stock has been on a massive run. Shares of WDC stock have surged more than 200% year-to-date (YTD) and roughly 945% over the past 52 weeks. The rally has been driven by solid artificial intelligence (AI)-led demand and the company’s rapidly expanding earnings.

As AI adoption accelerates, hyperscale cloud providers and data centers are rapidly expanding their storage infrastructure to manage exploding volumes of data. Western Digital is capitalizing on this demand through its high-capacity nearline hard disk drives, which are critical for AI workloads and enterprise data storage.

This structural shift in the data infrastructure market could support sustained long-term growth for the company.

At the same time, Western Digital is benefiting from improving industry fundamentals. Tight supply conditions across the memory market have reduced product availability, creating a solid pricing environment for companies like Western Digital.

With demand strengthening and supply remaining constrained, Western Digital’s earnings could continue expanding at a solid pace. This means WDC stock has further potential upside.

Analysts Expect Western Digital’s Earnings to Double

In its fiscal third quarter, Western Digital’s adjusted EPS nearly doubled year-over-year (YOY), jumping 97% to $2.72. This sharp increase reflects strong demand trends, improving pricing conditions, and disciplined cost execution across the business.

Momentum in the company's bottom line is likely to accelerate as demand and favorable pricing trends persist. Consensus estimates project that Western Digital will earn $9.57 per share in fiscal 2026, up 111% from the prior year. Moreover, growth is expected to remain solid beyond fiscal 2026; analysts currently forecast another 75% earnings jump in fiscal 2027 to $16.71, suggesting the company could be entering a multiyear phase of profitability expansion. Notably, this estimate could also be revised upward.

One of the biggest catalysts is Western Digital’s shift toward higher-capacity storage products. The company continues to scale advanced technologies such as ePMR drives, while preparing for broader adoption of Heat-Assisted Magnetic Recording (HAMR)-based drives, both of which enable higher storage density and stronger margins. At the same time, increasing adoption of UltraSMR technology could further enhance profitability by improving storage efficiency and increasing the value of each drive shipped.

Management has also highlighted a favorable pricing environment, particularly for higher-capacity products, which is helping lift gross margins. Favorable pricing and solid operational execution indicate that Western Digital is set to deliver solid profitable growth in the quarters ahead.

Western Digital is benefiting from stronger operating leverage, lower interest expenses, and a more efficient tax structure as well. Together, these factors could significantly amplify bottom-line growth and position the company to generate record profitability over the next several years.

Is WDC Stock Still a Buy After Its Massive Rally?

WDC stock has surged in recent months, but the rally may not be over yet. Strong customer demand, significant earnings growth, and solid execution continue to support further upside in shares.

One of the key factors supporting WDC's investment appeal is the company’s strong demand visibility. Western Digital has already secured purchase commitments from its top seven customers through 2026. In addition, three of its five largest customers have signed longer-term agreements that extend into 2027 and 2028. These commitments provide revenue stability and allow the company to plan production capacity more efficiently.

Despite the recent rally, Western Digital’s valuation still appears reasonable, supported by its earnings growth potential. WDC stock currently trades at a forward price-to-earnings (P/E) ratio of 50.6 times. That may seem elevated at first glance, but solid earnings growth indicates that a premium multiple is warranted.

Broader market sentiment also remains highly optimistic. Wall Street analysts maintain a “Strong Buy” consensus rating on the stock. The Street's highest price target of $660 implies potential upside of 26% from current levels.

Taken together, Western Digital’s improving fundamentals, strong customer commitments, and earnings momentum indicate that WDC stock has room to climb higher from here.