Western Digital Stock Skyrockets on AI Demand – Analysts Eye Even Bigger Gains

Recent Stock Performance: WDC shares have surged sharply. The stock closed around $126 on Oct. 23 and jumped to $141.37 by Oct. 29, 2025 ^[1] ^[2]. Trading volume has been unusually high (~10.9 million shares on Oct. 29 vs. ~8.2 million average ^[3]), reflecting strong investor interest. In pre-market on Oct. 30 it traded near $138 ^[4], slightly below the prior close.
Strong Q1 Earnings: Western Digital’s Oct. 30 after-hours report showed Q1 FY2026 earnings well above forecasts. Adjusted EPS was $1.78 (vs. $1.58 expected) and revenue $2.82 billion (vs. $2.73 billion expected), up 27% year-over-year ^[5]. The company raised its guidance for Q2 (Nov–Jan 2026) to about $2.9 billion in revenue (±$100M) and $1.88 EPS (±$0.15), both above analysts’ prior estimates ^[6]. Gross margins widened dramatically (to ~43.9% vs. 37.3% a year ago) ^[7], and WD even increased its quarterly dividend by 25% (to $0.125 per share) ^[8].
AI and Cloud Demand: Management credited booming AI and cloud data demand for the strong results. TechStock² reports WD plans hard-drive price hikes to manage “booming demand,” and has opened an AI-focused test lab to serve enterprise customers ^[9]. Earlier, WD said nearly 90% of its sales now come from cloud storage customers – reflecting surging need for scalable data storage (driven by AI applications) ^[10] ^[11].
Analyst Upgrades and Price Targets: Wall Street has become overwhelmingly bullish on WDC. Wedbush analysts just raised their WDC target to $135 (from $90), citing ongoing HDD supply constraints ^[12]. Other firms followed suit: Loop Capital and Wells Fargo set targets around $150, Bank of America to $145, Citigroup to $135, and UBS/Goldman Sachs to mid-$130s ^[13] ^[14]. Morgan Stanley even named WDC a “Top Pick” ^[15]. (MarketBeat notes WDC’s consensus rating is a Moderate Buy with an average target ~$127 ^[16].)
Peer Comparison: Storage and memory peers have also soared on AI themes. Seagate Technology (STX) stock recently hit all-time highs (up ~7.7% on one day after similar price hikes) and Micron Technology (MU) has more than doubled this year ^[17] ^[18]. An Investopedia report highlights that Micron and Seagate are up >100% in 2025, and Western Digital itself has “nearly tripled” (i.e. up ~200%) YTD ^[19] ^[20] – making these “pick-and-shovel” AI infrastructure plays top market performers.
Market Sentiment: Investor sentiment is very bullish. Unusually large numbers of WDC call options are being bought, and trading volume has run above average ^[21] ^[22]. MarketBeat flagged ~27,700 call options bought on Oct. 29 (22% above normal) and WDC stock volume ~10.9M vs. 8.2M average ^[23] ^[24]. Broad tech/AI enthusiasm is supporting these moves. However, with WDC’s forward P/E near 23× and P/S ~4.5× (well above tech norms) ^[25], some investors caution the stock may be richly valued.

WDC Near Record Highs on Earnings News

Western Digital stock has been on a tear in October. On Oct. 23 it closed around $126.63 ^[26]; by Oct. 29, the price had spiked into the $141 range (an intraday record) on heavy volume ^[27]. In pre-market trading Oct. 30 it dipped slightly (~$138) ^[28] but remained near multi-year highs. This rally was punctuated by the after-hours release of Q1 FY2026 results on Oct. 30.

Q1 FY2026 Results Exceed Expectations

The fiscal Q1 (ended Oct 3, 2025) results were a blowout. On an adjusted basis, EPS came in at $1.78 versus $1.58 expected, and revenue was $2.82 billion versus $2.73B consensus ^[29]. This marked a 27% revenue jump year-over-year, powered by strong demand from cloud data centers. Management guided Q2 revenue around $2.90B (±$0.1B) and adjusted EPS ~$1.88 (±$0.15) ^[30] – above analyst forecasts. Non-GAAP gross margins rose to ~43.9%, up from 37.3% a year ago ^[31], signaling healthier profitability. The company also announced a 25% increase in its quarterly dividend to $0.125 ^[32], underscoring confidence in its cash flow.

CEO Irving Tan emphasized Western Digital’s momentum: “As AI accelerates data creation, Western Digital’s continued innovation and operational discipline position us well to capture new opportunities and drive sustained shareholder value” ^[33]. In short, the results showed Western Digital hitting on all cylinders in an AI-driven environment.

AI/Cloud Boom Fuels Growth

Western Digital is explicitly attributing the surge to AI and cloud storage trends. The company has told customers it will raise HDD (hard-disk drive) prices amid “booming demand” for high-capacity storage ^[34]. It even opened a new AI-focused system integration and test lab, reflecting management’s view that HDDs are the “backbone” of the AI data economy ^[35]. This mirrors industry-wide narratives: storage and memory makers are benefiting from “pick-and-shovel” demand to feed data centers for AI models ^[36] ^[37]. Western Digital’s Q4 FY2025 sales (reported July 2025) were $2.61B (+30% YoY) ^[38], and cloud/data-center customers now account for the vast majority of its revenue. All signs point to a sustained tailwind as long as AI projects and cloud spending keep climbing.

Analyst Upgrades and Commentary

Wall Street analysts have turned very upbeat on WDC. “Given an underlying shortfall in supply that appears unlikely to be alleviated for years,” Wedbush said in bumping its WDC target to $135 (from $90) ^[39]. Similarly, Loop Capital and Wells Fargo lifted their targets to about $150, Bank of America to $145, Citigroup to $135 ^[40], and UBS/Goldman to the mid-$130s ^[41]. Wells Fargo even reiterated an “Overweight” rating as it raised its price objective to $150 ^[42]. At the same time, Morgan Stanley declared WDC a “Top Pick” on its conviction that AI demand will remain strong ^[43]. MarketBeat data show 17 analysts now rate WDC a Buy (with only 5 holds) ^[44], and the consensus price target is about $127 ^[45] – roughly in line with current levels. As one analyst put it, recent upgrades reflect confidence that hard-drive makers will enjoy higher pricing and margins for years ahead ^[46].

However, some warn the valuation is now high: Western Digital trades around 23× forward earnings and ~4.5× sales ^[47], above typical tech multiples. Investors note that part of the recent run-up is already built into current prices. Still, virtually all analysts agree that, absent a sudden drop in data demand, WDC’s fundamentals justify much of the rally so far.

Peers Also Surging

Western Digital is not alone. Its main competitors have enjoyed similar rallies on the AI/storage wave. Seagate Technology (NASDAQ: STX) shares hit record highs in mid-2025 – including a 7.7% jump on a single day after supply-demand news ^[48]. Micron Technology (NASDAQ: MU), a leader in memory chips, has more than doubled this year ^[49]. An Investopedia report notes that Micron and Seagate have more than doubled in value in 2025, and Western Digital “nearly tripled” ^[50] – making all three among the S&P 500’s top performers for the year. Analysts see these as classic AI-infrastructure plays: as one UBS strategist commented, intensifying shortages amid booming demand could lift all of them ^[51] ^[52]. In short, WDC’s surge is part of a broader technology rally fueled by the relentless growth of AI and data centers ^[53] ^[54].

Market Sentiment & Volume

Investor sentiment toward WDC is extremely bullish. Trading volume has frequently run above average – for example, on Oct. 29 about 10.94 million shares traded, versus a typical 8.20M ^[55]. Many traders have piled into WDC call options, indicating expectations of further gains ^[56]. (MarketBeat flagged ~27,700 calls bought on Oct. 29 – 22% above normal.) This speculative fervor echoes the broader market’s AI enthusiasm. For context, even on days when overall tech stocks sagged (amid U.S. government shutdown fears and China trade worries ^[57]), WDC and its peers continued to climb on their AI tailwinds.

Short- and Medium-Term Outlook

Most analysts now project continued growth in the near term. Street consensus sees double-digit revenue growth extending into FY2026 quarters ^[58]. If AI and cloud spending remain robust, Western Digital could push toward the high end of analyst targets (some have even forecast ~$190 under best-case scenarios ^[59]). However, the stock’s lofty valuation means some caution. Over the medium term, further gains will likely depend on how data-center demand and supply dynamics evolve. If supply shortages persist, industry profit margins could stay strong, supporting WDC’s stock. But if global HPC spending cools or competition intensifies, the share price could pull back.

In summary, Western Digital’s stock is riding a potent wave of AI/data demand and earnings momentum. Its near-term trajectory looks positive, bolstered by recent beats and bullish analyst sentiment ^[60] ^[61]. Investors will be watching upcoming market conditions and WD’s execution closely – but for now, WDC appears to be “capturing new opportunities” in the AI-driven data-storage boom ^[62] ^[63], a theme many believe still has room to run.

Sources: Western Digital Q1 FY2026 earnings release and related news ^[64] ^[65]; TechStock² and MarketBeat analyses ^[66] ^[67]; Investopedia reports on data storage stocks ^[68] ^[69]; MarketBeat trading data ^[70] ^[71]; Public.com market data ^[72]; Reuters market reports ^[73].

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