Why Western Digital (WDC) Is Up 13.2% After Strong Q1 Earnings and New Finance Leadership

• Western Digital recently reported strong first-quarter results for fiscal 2026, with revenues rising to US$2.82 billion and net income reaching US$1.18 billion, powered by demand for data storage solutions in cloud and AI markets.
• The company also announced the appointment of Brad Feller as its new Senior Vice President and Chief Accounting Officer, signaling investment in financial leadership as part of its growth and governance priorities.
• We'll examine how the robust outperformance in cloud-driven storage demand could influence Western Digital's future investment narrative and risk outlook.

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Western Digital Investment Narrative Recap

To be a shareholder in Western Digital, you need confidence in secular growth for hyperscale data storage and a belief that cloud and AI demand will continue to fuel robust revenue streams. The company’s latest earnings, driven by surging cloud storage needs, reinforce this thesis; however, they do not significantly reduce the concentration risk that comes with selling predominantly to a handful of major cloud customers, a factor that remains the most important near-term catalyst and biggest ongoing risk.

Among this quarter’s announcements, the 25% dividend increase to US$0.125 per share stands out. This signals Western Digital’s confidence in cash flow strength amid strong cloud-driven results and appeals directly to shareholders while aligning with a focus on shareholder returns, a key aspect of the current investment case.

Yet, despite these positive signals, investors should also keep in mind the ongoing risk of customer concentration in cloud storage markets and what could happen if...

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

Western Digital's outlook projects $11.9 billion in revenue and $2.2 billion in earnings by 2028. This scenario assumes 7.6% annual revenue growth and a $0.6 billion increase in earnings from the current $1.6 billion.

Uncover how Western Digital's forecasts yield a $167.48 fair value, a 5% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members provided four fair value estimates for Western Digital, ranging from US$85 to US$230 per share. With heavy reliance on a small set of cloud customers, wide-ranging investor opinions suggest you should review multiple views as you assess the company's future prospects.

Explore 4 other fair value estimates on Western Digital - why the stock might be worth as much as 44% 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 4 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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