Western Digital (NASDAQ:WDC) Shares Gap Down - Should You Sell?

Key Points

• Western Digital shares fell sharply, opening at $359 versus a prior close of $386.94 and last trading around $368, amid a broader chip-sector selloff and concerns about Chinese competition and HDD supply.
• The company’s fundamentals remain strong: its latest quarterly earnings and revenue exceeded estimates, with revenue up 43.8% year over year, while demand for high-capacity storage tied to cloud infrastructure and AI supports the outlook.
• Analysts maintain a generally positive view, with a consensus “Moderate Buy” rating and average price target of $618.63, but elevated valuation, high growth expectations and execution risks have prompted some target-price cuts, including UBS’s reduction to $470.

Shares of Western Digital Corporation (NASDAQ:WDC - Get Free Report) gapped down before the market opened on Tuesday. The stock had previously closed at $386.94, but opened at $359.00. Western Digital shares last traded at $368.0440, with a volume of 2,515,478 shares.

Western Digital News Roundup

Here are the key news stories impacting Western Digital this week:

• Positive Sentiment: Western Digital is expected to report substantial year-over-year earnings growth in its upcoming fiscal first-quarter results. Analysts are also looking for continued benefits from high-capacity storage demand, cloud infrastructure expansion and AI-related data growth. Earnings Preview: What To Expect From Western Digital's Report
• Positive Sentiment: Recent analysis highlights Western Digital’s strong fiscal 2026 results and upbeat fiscal 2027 outlook, supported by rising demand for high-capacity drives used in cloud and AI data centers. The company’s growth trajectory remains a longer-term support for the stock, although valuation expectations are now high after its significant multiyear rally. Is Western Digital’s AI-Fueled Outlook Reframing Its Role in Cloud Infrastructure Leadership?
• Neutral Sentiment: Analysts are debating whether Western Digital can sustain approximately 44% fiscal 2027 revenue growth. Cloud demand, AI-driven storage needs and favorable pricing are encouraging, but the comparison base and elevated expectations create greater execution risk. Can Western Digital Sustain 44% Revenue Growth in Fiscal 2027?
• Negative Sentiment: UBS lowered its price target amid concerns about HDD supply, adding a company-specific reason for investor pressure ahead of earnings. Western Digital Shares Fall as UBS Cuts Price Target Amid HDD Supply Concerns
• Negative Sentiment: A global chip selloff is weighing on AI-exposed technology stocks as investors question the sustainability of AI investment and assess intensifying competition. Global Chip Selloff Deepens as AI Worries, China Competition Weigh
• Negative Sentiment: Chinese memory maker CXMT reportedly flagged progress on a denser server-chip design, raising fears that increased Chinese competition could pressure pricing and future demand in the most profitable storage and memory markets. The resulting sector selloff has spread to Western Digital and other storage names. SK Hynix Sinks as Seoul Selloff Extends; Western Digital and Seagate Drop

Analysts Set New Price Targets

Several equities analysts have recently commented on WDC shares. The Goldman Sachs Group reduced their target price on Western Digital from $650.00 to $615.00 in a research note on Thursday, August 6th. TD Cowen raised their price target on shares of Western Digital from $500.00 to $540.00 and gave the stock a "buy" rating in a research report on Thursday, August 6th. BNP Paribas Exane lifted their price target on shares of Western Digital from $660.00 to $700.00 and gave the stock an "outperform" rating in a research note on Thursday, August 6th. Wells Fargo & Company upped their price target on shares of Western Digital from $575.00 to $730.00 and gave the company an "overweight" rating in a report on Friday, July 10th. Finally, UBS Group cut their price target on shares of Western Digital from $525.00 to $470.00 and set a "neutral" rating on the stock in a report on Monday. One research analyst has rated the stock with a Strong Buy rating, twenty-one have issued a Buy rating and six have assigned a Hold rating to the company's stock. According to data from MarketBeat, the stock presently has a consensus rating of "Moderate Buy" and an average target price of $618.63.

Western Digital Trading Down 3.5%

The company has a market cap of $139.81 billion, a price-to-earnings ratio of 15.44, a price-to-earnings-growth ratio of 1.68 and a beta of 2.11. The firm has a 50-day moving average price of $453.25 and a 200 day moving average price of $476.04.

Western Digital (NASDAQ:WDC - Get Free Report) last issued its quarterly earnings results on Wednesday, August 5th. The data storage provider reported $3.56 earnings per share for the quarter, beating analysts' consensus estimates of $3.31 by $0.25. The business had revenue of $3.75 billion during the quarter, compared to the consensus estimate of $3.70 billion. Western Digital had a return on equity of 48.15% and a net margin of 72.95%. The business's quarterly revenue was up 43.8% on a year-over-year basis. During the same period in the previous year, the business earned $1.66 EPS. Western Digital has set its Q1 2027 guidance at 3.850-4.150 EPS. Research analysts anticipate that Western Digital Corporation will post 19.65 earnings per share for the current fiscal year.

Western Digital Announces Dividend

The firm also recently disclosed a quarterly dividend, which was paid on Thursday, September 17th. Shareholders of record on Tuesday, September 8th were issued a $0.15 dividend. This represents a $0.60 dividend on an annualized basis and a yield of 0.2%. The ex-dividend date of this dividend was Tuesday, September 8th. Western Digital's payout ratio is currently 2.48%.

Insider Buying and Selling at Western Digital

In other Western Digital news, insider Cynthia Tregillis sold 432 shares of the stock in a transaction on Friday, September 4th. The shares were sold at an average price of $451.20, for a total transaction of $194,918.40. Following the sale, the insider directly owned 111,030 shares of the company's stock, valued at approximately $50,096,736. This represents a 0.39% decrease in their ownership of the stock. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is available at the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Vidyadhara Gubbi sold 1,795 shares of the stock in a transaction on Friday, September 4th. The stock was sold at an average price of $459.87, for a total transaction of $825,466.65. Following the sale, the insider directly owned 80,571 shares in the company, valued at $37,052,185.77. This trade represents a 2.18% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. Insiders sold a total of 25,437 shares of company stock worth $11,461,345 over the last 90 days. Insiders own 0.20% of the company's stock.

Institutional Investors Weigh In On Western Digital

Several institutional investors and hedge funds have recently bought and sold shares of WDC. Legal & General Group Plc bought a new stake in Western Digital during the second quarter valued at about $1,602,927,000. Anther Capital Ltd bought a new position in shares of Western Digital in the second quarter worth about $901,601,000. Deutsche Bank AG acquired a new position in shares of Western Digital during the 2nd quarter worth about $885,565,000. Value Aligned Research Advisors LLC bought a new stake in Western Digital during the 1st quarter valued at approximately $350,403,000. Finally, Trivest Advisors Ltd bought a new stake in Western Digital during the 2nd quarter valued at approximately $627,606,000. Institutional investors and hedge funds own 92.51% of the company's stock.

Western Digital Company Profile

Western Digital Corporation NASDAQ: WDC develops, manufactures and supplies data-storage products and solutions. The company's portfolio is centered on hard disk drives (HDDs) used in cloud and enterprise data centers, personal computers, network-attached storage systems and other applications that require high-capacity data storage.

Western Digital markets products under brands including Western Digital, WD and Ultrastar. Its offerings include enterprise and data-center HDDs, storage products for business and consumer systems, and related technologies designed to help organizations store, manage and access large volumes of data.

Founded in 1970, Western Digital has evolved from a maker of electronic components into a global data-storage company.

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