Western Digital Corporation (WDC) saw its stock climb approximately 3.5% to $480 in late Friday trading, as investor enthusiasm for AI-related data storage stocks remained robust. The move was bolstered by the company's latest step in unwinding its remaining ties to the flash memory business through a share exchange with Sandisk.
The company disclosed that it had agreed to swap 653,203 Sandisk shares for 1,865,801 of its own shares with institutional investors, a transaction scheduled to settle on May 7. Following this exchange, Western Digital will retain approximately 1,038,681 Sandisk shares, valued at roughly $1.6 billion based on Friday's closing price. Management plans to divest these holdings through additional swaps for debt or stock, or by distributing them as dividends.
This strategic shift marks a significant transformation for Western Digital, which spun off its flash memory unit as Sandisk in 2025. The company is now primarily viewed as a pure-play hard disk drive (HDD) supplier, catering to cloud and enterprise clients seeking cost-effective, high-capacity storage solutions for AI workloads. The move has sharpened its focus on the growing demand for HDDs in data centers supporting artificial intelligence applications.
Western Digital's fiscal third-quarter results underscored the strength of this demand. Revenue for the period ended in March reached $3.34 billion, a 45% year-over-year increase, exceeding Wall Street expectations. Non-GAAP diluted earnings per share came in at $2.72, also above consensus estimates. The company attributed the performance to robust demand from hyperscale cloud customers and enterprise clients investing in AI infrastructure.
Looking ahead, Western Digital provided fiscal fourth-quarter guidance that surpassed analyst forecasts. The company projects revenue in the range of $3.65 billion at the midpoint, with non-GAAP earnings per share of $3.25. Chief Executive Irving Tan highlighted that "the demand drivers are clear," pointing to the accumulation of data from AI workloads that require HDD storage. Chief Financial Officer Kris Sennesael noted that the business now has "visibility extending" into the coming quarters.
The positive sentiment extended to the broader storage sector. Sandisk shares surged 16.5% to close at $1,562.34, pushing its market capitalization to nearly $245.3 billion. Seagate Technology (STX) also advanced, gaining 2.1% to $782.64, following its own upbeat guidance earlier in the week. The rally reflects growing investor confidence in the storage industry's ability to capitalize on AI-driven data growth.
Despite the upbeat outlook, Western Digital cautioned about potential headwinds. The company flagged risks including demand volatility, tariffs or new trade regulations, supplier concentration, price competition, and supply-chain disruptions. These factors could cause actual results to deviate from current expectations, underscoring the uncertainty in the global macroeconomic environment.
Investors will have opportunities to gain further insights into Western Digital's strategy and market conditions at upcoming industry events. The company is scheduled to present at J.P. Morgan's technology conference on May 18, followed by Bank of America's tech conference on June 2. These presentations are expected to provide updates on customer contracts, pricing dynamics, and capacity expansion plans.
