Western Digital (WDC) Valuation in Focus After Analyst Upgrades and Earnings Surprises

If you've been watching Western Digital (WDC) lately, you probably haven't missed the flurry of analyst upgrades and favorable ratings lighting up the headlines. Morgan Stanley just crowned Western Digital as a Top Pick, while both Barclays and Citi have kept confident Buy ratings. All this comes on the heels of the company clocking yet another positive earnings surprise, and the stock racing to a new 52-week high. For investors who have been on the sidelines, this sudden burst of enthusiasm from Wall Street voices is hard to ignore.

It is easy to see why attention is picking up. Western Digital shares have soared 25% in the past month, bringing the total return over the year to an impressive 108%. This run has been supported by a string of quarterly results that beat expectations and a strong signal from models tracking sentiment across investment timeframes. Notably, the company is still trading at a price-to-earnings ratio much lower than many of its tech peers, underscoring an ongoing debate about how the market values growth versus current fundamentals.

After such a dramatic move higher, the natural question for investors is clear: are we staring at an undervalued winner, or has the market already baked in all the good news?

Most Popular Narrative: 15.6% Overvalued

The leading narrative sees Western Digital as overvalued at current prices, largely due to exceptionally optimistic assumptions around AI-driven storage growth and persistent margin expansion.

Deep partnerships with hyperscalers and innovative drive technologies position the company to capture strong, sustained market and margin expansion from AI-driven storage demand. Improved financial health and platform solutions enable ongoing investment, expanded market reach, and greater shareholder returns.

Want to know why analysts think Western Digital's current price is running ahead of its fundamentals? The boldest assumptions power this outlook: imagine relentless top-line growth, improved efficiencies, and steeper upside driven by big data. Curious which future shifts might make or break the stock’s valuation case? Unlock the full narrative for a look into the specific financial forecasts and discount rates driving this call.

Result: Fair Value of $89.14 (OVERVALUED)

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

However, key risks remain, such as heavy reliance on a few cloud customers and the rapid pace of storage technology change, which could derail bullish forecasts.

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

Another View: Market Valuation Tells a Different Story

Looking through the lens of earnings multiples, Western Digital actually trades at a discount to the tech industry average. This challenges the overvaluation narrative and suggests opportunity may remain. So which method should you trust?

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

Stay updated when valuation signals shift by adding Western Digital to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Western Digital Narrative

If the consensus doesn't match your view, or you're driven to dig deeper into the numbers yourself, you can easily build your own narrative from scratch in just a few minutes. Do it your way

A great starting point for your Western Digital research is our analysis highlighting 4 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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