The Bull Case For Western Digital (WDC) Could Change Following Return To Profitability And Raised Guidance

• Western Digital recently reported earnings for the year ended June 27, 2025, posting US$9.52 billion in sales and a net income of US$1.89 billion, a turnaround from a net loss the previous year.
• The company's return to profitability, along with guidance for continued revenue growth in the next quarter, highlights renewed confidence in business momentum.
• We'll examine how Western Digital's shift to annual profitability and new quarterly guidance could impact its investment narrative and market outlook.

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Western Digital Investment Narrative Recap

To be a Western Digital shareholder, you need to believe in the company’s ability to capture ongoing demand for data storage and successfully transition innovations, particularly with AI-driven growth as a catalyst. The latest return to annual profitability and positive revenue guidance for the upcoming quarter reinforce business momentum, but the most important short-term catalyst, securing sustained enterprise and hyperscale demand, faces uncertainty from potential operational hiccups or rapid market shifts; the risk of overexposure to a small customer set remains and is not materially diminished by these results.

The announcement of a US$0.10 per share dividend is particularly relevant, reflecting confidence in the company’s balance sheet following its shift to profitability. It also signals a focus on returning value to shareholders, connecting directly to a key catalyst: Western Digital’s disciplined capital allocation plans, now made more tangible by heightened earnings visibility.

However, investors should bear in mind that even with improved profits, Western Digital’s reliance on hyperscale customers could expose earnings to...

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

Western Digital's outlook anticipates $10.9 billion in revenue and $1.8 billion in earnings by 2028. This reflects an annual revenue decline of 11.2% and a $0.7 billion increase in earnings from the current $1.1 billion.

Uncover how Western Digital's forecasts yield a $68.67 fair value, a 4% downside to its current price.

Exploring Other Perspectives

Simply Wall St Community members submitted two fair value estimates for Western Digital, ranging from US$68.67 to US$77.58 per share. Participation in the AI storage market and new product rollouts can sway sentiment, so consider these varied viewpoints as you assess future business momentum.

Explore 2 other fair value estimates on Western Digital - why the stock might be worth as much as 9% 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 2 important warning signs 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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