Western Digital Corporation (WDC) shares reached a new all-time high on Tuesday, surging approximately 10% to $532.74, as Wall Street analysts increasingly recognize the company's pivotal role in the artificial intelligence data center supply chain. The rally was fueled by an upgraded price target from Evercore ISI, which raised its valuation to $575 from $500 while maintaining an Outperform rating.
The investment firm pointed to robust demand for high-capacity hard disk drives (HDDs) driven by AI workloads, including training and inference processes. Unlike earlier perceptions of HDDs as a slow-growth hardware segment, investors now view them as essential components for storing vast amounts of data generated by AI systems cost-effectively.
Evercore ISI analyst Amit Daryanani noted that Western Digital and the HDD sector remain "critical and still underappreciated" parts of the AI buildout. He expects revenue growth for the group to outpace exabyte growth, which measures storage capacity shipped. The company's market capitalization approached $183.6 billion during Tuesday's trading session, after hitting an intraday high of $536.
The positive sentiment extends across the storage industry. Seagate Technology, Western Digital's primary HDD competitor, gained about 4%, while memory and storage names like Micron Technology and Sandisk also traded higher as investors continued to seek AI-linked opportunities.
Western Digital's financial performance underscores the trend. For the fiscal third quarter ended in April, the company reported revenue of $3.34 billion, a 45% increase year-over-year. Non-GAAP diluted earnings per share came in at $2.72. Looking ahead, management guided for fiscal fourth-quarter revenue of approximately $3.65 billion, plus or minus $100 million.
In a move reflecting confidence in its cash flow, Western Digital raised its quarterly dividend by 20% to 15 cents per share. CEO Irving Tan emphasized that AI workloads generate data that "must be stored persistently and cost-efficiently on HDDs." The company completed the spin-off of its flash-memory subsidiary Sandisk in February 2025, allowing it to focus entirely on HDDs as a pure-play data center supplier.
Despite the recent surge, some caution is warranted. The stock has rallied nearly 910% over the past year, raising concerns about valuation. Investing.com's fair-value analysis suggests the stock may be trading above its intrinsic worth. Risks include potential demand fluctuations, pricing pressures, supply chain disruptions, and tariff-related uncertainties, as outlined in Western Digital's regulatory filings.
For now, the market is placing a premium on scarcity. While HDDs may not capture the same headlines as AI chips, Tuesday's record-high trading made it clear that investors still value companies that store the data once the processing is complete.
