Western Digital Is Making the Right Moves Amid Fierce Momentum for Memory Stocks

The AI stock juggernaut has been one of the biggest wealth creators for investors in recent times. Recently, Evercore opined that Western Digital (WDC), a storage company, has been “underappreciated” by investors. Even in that scenario, WDC stock has skyrocketed by 895.6% in the last 52-weeks. The ferocity of the rally from undervalued levels speaks volumes on the pace of the AI infrastructure buildout.

At the same time, the rally is not just pinned on excitement or euphoria. Western Digital has reported robust top-line growth, operating margin expansion, and cash flow upside. Further, with innovation, the company’s product roadmap is likely to ensure that the positive momentum sustains. 

As Western Digital builds and gets bigger, the company has added former Nvidia (NVDA) and Microsoft (MSFT) executive Manuvir Das to its board of directors. Western Digital believes that the company can leverage on Das’s experience in terms of driving innovation and operationalizing AI at scale. As Western Digital positions itself for multi-year growth, the addition to the board is likely to prove invaluable. 

About Western Digital Stock

Headquartered in San Jose, Western Digital is a developer, manufacturer, and provider of data storage devices and solutions based on hard disk drive. In February 2025, the company completed the business separation of the HDD and flash business units. Sandisk Corporation (SNDK) was separately listed as a flash business entity. Besides value unlocking, this business separation allows Western Digital to pursue laser sharp production innovation and development. 

Western Digital’s end market primarily consists of Cloud, Client (OEMs and channel customers), and Consumer. The company services this market through Western Digital and WD brands. 

With innovation as the driving factor, the company has 4,500 active patents. It’s worth noting that for 2026, Western Digital is focused on high-volume production of HAMR devices in the range of 36 to 44 TB. Further, Western Digital is targeting HAMR devices in the range of 80 to 100 TB by the end of the decade. The roadmap is likely to ensure that Western Digital maintains or gains market share.  Amidst these positives, the price-action remains bullish and WDC stock has gained 219% in the last six months. 

Robust Growth Momentum

For Q3 FY26, Western Digital reported revenue growth of 45% year-over-year (YOY) to $3.34 billion. Further, the company reported operating margin of 35.7%, which was higher by 260 basis points YOY. Another important highlight for the quarter was free cash flow of $978 million. Considering the growth trajectory, Western Digital is positioned for FCF in excess of $4.5 billion for FY27. 

From a growth perspective, 80% of storage within the cloud is based on HDDs. Therefore, these devices form the foundation of AI and cloud data storage. The revenue and cash flow visibility is consequently robust. Notably, during Q3, the company reduced debt and improved its net cash position. So as credit metrics improve, Western Digital is positioned to increase shareholder returns. 

What Do Analysts Say about WDC Stock?

Based on 25 analysts with coverage, WDC stock has a consensus “Strong Buy” rating. While 21 analysts have a “Strong Buy” rating for WDC stock, one has a “Moderate Buy,” and three have a “Hold” rating. 

The mean price target of $512.27 represents a downside of 3.35% from current levels. However, the most bullish price target of $660 suggests that WDC could climb 24.53% from here.

Concluding Views

For FY26 and FY27, analysts expected Western Digital to deliver earnings growth of 111.26% and 74.61%, respectively. As a matter of fact, Western Digital is “sold out for calendar 2026 and has been signing long-term agreements for calendar 2027.” Besides robust growth, Western Digital is positioned to deliver free operating cash flow of $2.8 billion and $3.8 billion for FY27 and FY27, respectively. 

Therefore, a forward price-earnings ratio of 55.45 times does not indicate stretched valuations with price-earnings-to-growth remaining below 1. As the company pursues its innovation driven roadmap, it’s likely that robust growth will sustain beyond 2027. The positive outlook beyond FY27 is supported by structural industry tailwinds. Overall, even after stellar returns in the last 52-weeks, WDC stock looks attractive.