Western Digital (WDC): Valuation in Focus After Analyst Upgrades, Strong Storage Margins, and Share Buyback

Western Digital (WDC) has been drawing fresh attention after a flurry of analyst upgrades, earnings estimate revisions, and the company’s recent share buyback. Tightening supply conditions and improving margins in storage are fueling this momentum.

See our latest analysis for Western Digital.

Western Digital’s share price has seen a sharp run this year; after surging 18.2% over the past month, it is now up 86.6% year-to-date and has posted a standout 136.1% total shareholder return for the last twelve months. While short-term price swings have been dramatic, the long-term performance and strong industry tailwinds suggest momentum is building as the market re-evaluates Western Digital’s growth story and risk profile.

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After such a rapid surge in Western Digital’s share price and repeated upgrades from analysts, the question remains: is there still value left for new investors, or is the market already pricing in all the company’s future growth?

Most Popular Narrative: 11.4% Overvalued

Western Digital’s last close of $115.42 sits well above the narrative fair value estimate of $103.59, highlighting a notable valuation gap between current market enthusiasm and what the most widely followed narrative believes is justified. This sets the backdrop for heated debates on whether Western Digital’s future growth strength can truly keep pushing prices higher.

Higher adoption of Western Digital's larger capacity, high-value ePMR and UltraSMR drives, with rapid qualification and ramp cycles, demonstrates customer trust and enables both pricing power and favorable product mix. This leads to structurally higher gross margins and improved net margins over time.

Read the complete narrative.

Want to know the secret sauce fueling this aggressive valuation call? The market is betting on transformation in how Western Digital captures new demand. Beneath the surface, bold projections for future growth, margins, and earnings per share set the stage for this fair value. Will these ambitious assumptions stand up to scrutiny? Dive in and discover what’s really moving the needle behind that number.

Result: Fair Value of $103.59 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, heavy reliance on a few major cloud customers, along with volatility in end-market demand, could quickly challenge even the most optimistic growth scenario.

Find out about the key risks to this Western Digital narrative.

Another View: Comparing Ratios Raises Questions

Looking from another angle, Western Digital’s price-to-earnings ratio of 24.8x is below the US Tech industry average of 28.3x, but above both its peer average of 22x and its own fair ratio, which sits at 33x. This means the company appears cheaper than the industry, yet less so compared to close rivals, with more room to move toward its fair ratio. For investors, does this gap point to untapped upside, or do peers highlight valuation risk the market is overlooking?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Western Digital Narrative

If you think there’s more to Western Digital’s story, or would rather dive into the numbers yourself, you can build your own perspective in just a few minutes with Do it your way.

A great starting point for your Western Digital research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

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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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