TLDR
- WDC stock rose 5.9% to $467.46, driven by a broad memory-sector rally and AI data-center demand optimism.
- Western Digital beat quarterly earnings with $3.56 EPS and $3.75 billion in revenue, topping analyst estimates.
- Management guided Q1 2027 EPS of $3.85 to $4.15, with revenue expected around $4.1 billion.
- Analysts hold a “Moderate Buy” consensus with an average price target of $534.56.
- CEO Irving Tan sold $8.9 million in stock in August, alongside other insider sales totaling over $10 million last quarter.
Western Digital (WDC) stock climbed 5.9% on Friday, trading as high as $468.19 before settling at $467.46. The previous close was $441.57.
Western Digital Corporation, WDC
The move came as memory and storage stocks broadly rallied, with SK Hynix up 7% and Seagate gaining 5%. Investors are betting that AI infrastructure spending will continue to support pricing and earnings across the sector.
WDC has now gained around 70% over the past six months, though it remains well off its 52-week high of $799.87, reached in June.
Strong Earnings Fuel the Bull Case
Western Digital posted fiscal Q4 results on August 5th that beat on both the top and bottom lines. EPS came in at $3.56, topping the $3.31 consensus estimate. Revenue hit $3.75 billion versus the $3.70 billion expected, up 44% year over year.
Cloud revenue drove the quarter, accounting for roughly 89% of total sales at $3.3 billion, up 43% year over year. Demand for high-capacity nearline hard disk drives used in data centers was particularly strong.
Non-GAAP gross margin expanded to 54.4% and operating margin reached 44.2%. Return on equity came in at 48.15%.
For Q1 2027, management is guiding for revenue of approximately $4.1 billion and EPS of $3.85 to $4.15. Non-GAAP gross margin is expected between 55% and 56%.
Pricing and Cost Trends Worth Watching
Price per terabyte rose in the high teens year over year, backed by long-term customer agreements running through 2029 to 2031. At the same time, cost per terabyte fell around 8% in the quarter, with the company targeting a 10% annual reduction going forward.
WDC is ramping its next-generation ePMR drives with capacities up to 40TB and plans for UltraSMR technology to make up around 60% of nearline shipments by fiscal 2027.
The company returned $3.1 billion to shareholders in fiscal 2026, including $1 billion in buybacks and $54 million in dividends in Q4 alone. It ended the year with roughly $500 million in net cash.
Analysts sit at a “Moderate Buy” consensus. Price targets range widely, with Cantor Fitzgerald at $900, JPMorgan at $650, and Susquehanna at $500. The average target is $534.56.
On the cautious side, CEO Irving Tan sold 20,000 shares on August 11th for roughly $8.9 million. Total insider sales last quarter topped $10.4 million. Both transactions were executed under pre-arranged Rule 10b5-1 plans.
The 50-day moving average sits at $508.41 and the 200-day at $445.56. The stock trades at 7.52 times forward sales, above the industry average of 3.05.
Zacks revised its fiscal 2027 EPS estimate up 7.5% to $20.03 and its fiscal 2028 estimate up 7.6% to $34.74 over the past 60 days.
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