Western Digital Corp (WDC) shares continued their upward trajectory on Friday, climbing 3.5% to close at $480.00 after touching an intraday high of $483.66. The stock traded approximately 7.9 million shares, bringing the company's market capitalization to roughly $165 billion. This latest gain underscores the market's growing appetite for data-storage companies positioned to benefit from the artificial intelligence infrastructure buildout.
Pure-Play HDD Focus
The significance of this move is heightened by Western Digital's recent corporate restructuring. Following the separation of its Sandisk unit, the company now operates as a pure-play hard disk drive (HDD) manufacturer. A regulatory filing confirms that its single reportable segment is HDD—the drives used for large-scale data storage in cloud and enterprise environments. This transformation makes Western Digital a more direct beneficiary of AI-driven storage demand, especially as the broader memory and storage supply chain remains tight.
Supply Chain Tightness
Reuters reported on Friday that surging memory prices are already impacting consumer electronics giants like Sony and Nintendo, as AI data-center demand constrains supply across various tech hardware sectors. This supply-demand imbalance is creating favorable pricing conditions for HDD makers.
Sandisk Stake Exchange
Western Digital also took steps this week to streamline its remaining Sandisk holdings. The company entered into exchange agreements with institutional investors, receiving 1,865,801 of its own shares in exchange for 653,203 Sandisk shares. Settlement is expected on May 7. Following the transaction, Western Digital will retain 1,038,681 Sandisk shares. This stock-for-stock exchange is not a traditional cash buyback but rather a strategic move to reduce the post-spinoff overhang by leveraging the highly valued former unit.
Strong Financial Performance
The company's recent earnings report provides a solid backdrop. For the fiscal third quarter, Western Digital reported revenue of $3.337 billion, a 45% year-over-year increase, and non-GAAP earnings per share of $2.72. Management forecasted fiscal fourth-quarter revenue of $3.65 billion (plus or minus $100 million) and non-GAAP EPS of $3.25 at the midpoint. Additionally, the company raised its quarterly dividend to 15 cents per share.
CEO Irving Tan attributed the demand surge to AI workloads, stating that "virtually every AI workload" generates data that requires persistent and cost-efficient storage on HDDs.
Analyst Optimism
Wall Street analysts have been chasing the rally. Cantor Fitzgerald raised its price target on Western Digital to $660 from $500, maintaining an overweight rating. The firm cited stronger pricing, robust data-center demand, and results that exceeded expectations.
Industry Dynamics
The competitive landscape remains important. Reuters reported last week that Seagate's strong forecast lifted storage stocks, including Western Digital, Micron, and Sandisk. Morningstar analysts expect the AI buildout to support stronger pricing power for HDD makers through at least 2030. In the adjacent memory trade, Business Insider noted that Sandisk, Seagate, Western Digital, and Micron have posted triple-digit gains this year. Roundhill CEO Dave Mazza highlighted that memory chips are "the most supply-constrained layer" of the AI infrastructure buildout.
Risks and Outlook
However, there are risks. Expectations may now outrun actual shipments and pricing. Michael Ashley Schulman, partner at Cerity Partners, warned that Western Digital and Sandisk's outlooks "fail to provide the necessary 'wow factor'" to sustain the rally's pace. Western Digital's own risk disclosures cite demand volatility, tariffs, supplier limitations, and competitive pricing as potential headwinds.
Investors will get further clarity soon. Western Digital is scheduled to appear at the J.P. Morgan technology conference on May 18, Bank of America's technology conference on June 2, and Evercore's TMT conference on June 3.
