Is Western Digital’s Nasdaq 100 Inclusion Reframing The AI Storage Investment Case For WDC?

• Earlier in December, Nasdaq announced that Western Digital would join the Nasdaq 100 index, reflecting the company’s growing role in large‑cap technology hardware and infrastructure.
• This index inclusion follows Western Digital’s post-separation focus on hard disk drives, AI-driven data center demand, and expansion into quantum computing-related technologies.
• We’ll now examine how Western Digital’s addition to the Nasdaq 100 potentially reshapes its AI-focused storage investment narrative and growth profile.

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Western Digital Investment Narrative Recap

To own Western Digital today, you need to believe that AI-driven data growth and high-capacity HDD adoption can offset customer concentration and technology transition risks. Joining the Nasdaq 100 may amplify short term volatility and liquidity, but it does not materially change the core near term catalyst, which remains hyperscaler demand for next generation drives, nor the biggest risk, which is reliance on a handful of cloud customers for the vast majority of revenue.

The recent investment in quantum hardware firm Qolab feels particularly relevant here, as it links Western Digital’s storage expertise to emerging compute architectures that will also generate and process massive datasets. While this initiative is early compared with the AI storage cycle, it adds another potential growth vector on top of upcoming ePMR and HAMR ramps that many shareholders already see as central to the thesis.

Yet while enthusiasm is high, Western Digital’s heavy dependence on a few hyperscale customers is a risk investors should be aware of if...

Read the full narrative on Western Digital (it's free!)

Western Digital’s narrative projects $11.9 billion revenue and $2.2 billion earnings by 2028. This requires 7.6% yearly revenue growth and a roughly $0.6 billion earnings increase from $1.6 billion today.

Uncover how Western Digital's forecasts yield a $181.43 fair value, a 4% upside to its current price.

Exploring Other Perspectives

Four Simply Wall St Community valuations for Western Digital range from US$85 to about US$231 per share, reflecting very different expectations. Against that spread, the concentration risk in hyperscale customers could materially change how each of those views plays out over time, so it is worth comparing several of them.

Explore 4 other fair value estimates on Western Digital - why the stock might be worth as much as 33% more than the current price!

Build Your Own Western Digital Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Western Digital research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Western Digital research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Western Digital's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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