Western Digital Corporation (WDC): A Bull Case Theory

We came crossed a bullish thesis on Western Digital Corporation connected The Simple Side’s Substack. In this article, we volition summarize the bulls’ thesis connected WDC. Western Digital Corporation's stock was trading astatine $214.00 arsenic of January 13th. WDC’s trailing and guardant P/E were 29.88 and 28.09 respectively according to Yahoo Finance.

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Western Digital Corporation develops, manufactures, and sells information retention devices and solutions based connected hard disk thrust (HDD) exertion successful the United States, Asia, Europe, the Middle East, and Africa. The institution offers interior HDDs, information halfway drives, information halfway platforms, outer drives, portable drives, NAS for location and office, and accessories.

Western Digital Corp (WDC) presents a compelling concern lawsuit driven by disciplined execution, marketplace leadership, and strategical absorption connected high-capacity nearline HDDs. In Q1FY26, the institution reported $2.82 cardinal successful revenue, a 27% year-over-year increase, with non-GAAP EPS of $1.78, a 30.4% operating margin, and $599 cardinal successful escaped currency flow.

Guidance for Q2FY26 anticipates sequential gross maturation to ~$2.9 cardinal with mid-40s margins, portion a $0.125 dividend summation and $553 cardinal successful buybacks show beardown currency conversion and assurance successful the request environment. Following the February 2025 separation of its Flash business, Western Digital present focuses exclusively connected HDD operations, aligning outgo operation with cloud-driven retention request and providing clearer visibility into profitability and superior allocation.

The company’s diversified vulnerability crossed Cloud, Client, and Consumer markets, with unreality starring gross and borderline gains, supports resilient growth. Technological enactment is underscored by accelerated ePMR and HAMR qualifications, which amended yield, density, and gross-margin imaginable toward the high-40s.

Management maintains disciplined capex astatine 4%–6% of revenue, avoiding caller portion capableness portion sustaining pricing power. Multi-year orders from hyperscale customers and a robust backlog supply visibility into gross and margins done CY27, supporting structural maturation successful a antecedently cyclical industry.

Valuation analyses utilizing DCF, SOTP, and adjacent multiples bespeak just worth successful the high-$100s, with upside toward $250 if borderline and exertion milestones are met, portion downside adjacent $90 is mitigated by beardown currency generation. WDC’s operation of operational discipline, technological innovation, and disposable currency flows positions it arsenic an charismatic concern with asymmetrical upside potential.