Western Digital (WDC) Sees AI-Driven Storage Demand Lift Revenue, Earnings, and Outlook

Western Digital (WDC) reported a 25% year-over-year revenue increase to $3 billion in the latest quarter, driven by strong demand for high-capacity nearline drives from hyperscale cloud customers. Adjusted earnings per share rose 78% to $2.13. Cloud sales accounted for 89% of revenue, up 28% year-over-year. Management projects Q3 revenue of $3.2 billion, gross margin of 47%-48%, and EPS of $2.30. Long-term customer commitments through 2026-2028 provide revenue visibility. WDC trades at 30.5x forward EPS despite analysts' 87.2% and 79.1% EPS growth forecasts for 2026 and 2027, respectively. A price target of $440 implies ~55% upside from recent levels.