Western Digital (NASDAQ:WDC) Stock Falls 7.4% - Should You Sell?

Key Points

• Western Digital shares fell 7.4% to about $366 despite record fiscal first-quarter results, including $4.38 billion in revenue and $4.64 in adjusted EPS, both ahead of expectations.
• Management’s strong outlook points to continued AI-driven data-center storage demand, but investors remain concerned about elevated sector valuations, sustainability of AI infrastructure spending, capital needs and broader weakness in memory and semiconductor stocks.
• Analyst sentiment remains broadly positive, with a “Moderate Buy” consensus and $591.04 average price target, although several firms recently cut their targets or downgraded the stock. The company also raised its quarterly dividend to $0.175 per share, while recent insider selling adds a sentiment headwind.

Western Digital Corporation (NASDAQ:WDC - Get Free Report) traded down 7.4% during mid-day trading on Friday. The stock traded as low as $361.11 and last traded at $366.11. Approximately 8,844,102 shares traded hands during trading, an increase of 2% from the average daily volume of 8,679,061 shares. The stock had previously closed at $395.41.

Trending Headlines about Western Digital

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

• Positive Sentiment: Western Digital reported fiscal first-quarter 2027 revenue of $4.38 billion, non-GAAP EPS of $4.64 and free cash flow of $1.38 billion, exceeding expectations. Management also forecast approximately $5.1 billion in fiscal second-quarter revenue and $5.80 in non-GAAP EPS, signaling continued strength in AI-related data-center storage demand. Western Digital slides as strong results fail to calm spending and sector worries
• Positive Sentiment: Analyst targets remain well above the current trading level, with Quiver Quantitative citing a six-month median target of $650. Several analysts view Western Digital as a major beneficiary of AI infrastructure expansion and rising demand for high-capacity nearline hard drives. Western Digital selloff and analyst targets
• Neutral Sentiment: Western Digital and Seagate are both benefiting from AI data-center spending. However, comparisons favor Seagate on some metrics, including return on equity, valuation and free-cash-flow generation, potentially affecting investor preference within the storage group. Seagate versus Western Digital
• Negative Sentiment: Investors are questioning whether AI infrastructure spending and lofty storage-sector valuations can remain sustainable. A sharp decline in Sandisk and weakness across memory and semiconductor stocks amplified pressure on WDC, even after Sandisk delivered strong results and raised guidance. Memory-sector selloff
• Negative Sentiment: Quarterly capital spending of $227 million, continued buybacks and capacity and technology-transition needs have raised concerns about cash demands and future returns. Profit-taking after WDC’s substantial earlier advance may also be contributing to the decline. Quiver also reports 110 insider sales and no insider purchases over the past six months, an additional sentiment headwind. Western Digital spending and insider activity

Analyst Ratings Changes

A number of analysts have commented on WDC shares. Summit Insights lowered Western Digital from a "buy" rating to a "hold" rating in a report on Thursday, August 6th. Wells Fargo & Company lowered their target price on Western Digital from $730.00 to $450.00 and set an "overweight" rating on the stock in a research note on Friday, October 16th. Argus cut their price target on Western Digital from $600.00 to $500.00 and set a "buy" rating for the company in a report on Monday. Susquehanna set a $405.00 price objective on shares of Western Digital in a research note on Friday, October 23rd. Finally, The Goldman Sachs Group set a $540.00 price target on shares of Western Digital in a report on Friday, October 23rd. One research analyst has rated the stock with a Strong Buy rating, twenty-one have assigned a Buy rating and six have assigned a Hold rating to the company's stock. Based on data from MarketBeat, the stock currently has a consensus rating of "Moderate Buy" and a consensus price target of $591.04.

Western Digital Trading Down 7.4%

The firm has a market capitalization of $137.04 billion, a P/E ratio of 14.21, a price-to-earnings-growth ratio of 1.40 and a beta of 2.11. The company's fifty day simple moving average is $423.52 and its 200 day simple moving average is $415.98.

Western Digital (NASDAQ:WDC - Get Free Report) last issued its quarterly earnings results on Thursday, October 22nd. The data storage provider reported $4.64 earnings per share for the quarter, topping the consensus estimate of $4.11 by $0.53. Western Digital had a return on equity of 55.62% and a net margin of 69.20%. The company had revenue of $4.38 billion for the quarter, compared to analysts' expectations of $4.14 billion. During the same period in the prior year, the firm earned $1.78 earnings per share. The firm's revenue for the quarter was up 55.5% on a year-over-year basis. On average, analysts predict that Western Digital Corporation will post 23.62 earnings per share for the current fiscal year.

Western Digital Increases Dividend

The firm also recently announced a quarterly dividend, which will be paid on Thursday, December 17th. Shareholders of record on Friday, December 4th will be issued a dividend of $0.1750 per share. This is an increase from Western Digital's previous quarterly dividend of $0.15. This represents a $0.70 dividend on an annualized basis and a yield of 0.2%. The ex-dividend date of this dividend is Friday, December 4th. Western Digital's dividend payout ratio is currently 2.33%.

Insiders Place Their Bets

In other Western Digital news, CEO Irving Tan sold 20,000 shares of the company's stock in a transaction that occurred on Tuesday, August 11th. The shares were sold at an average price of $444.97, for a total value of $8,899,400.00. Following the completion of the transaction, the chief executive officer directly owned 575,966 shares in the company, valued at $256,287,591.02. This represents a 3.36% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the SEC, which is available through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Cynthia Tregillis sold 1,007 shares of the business's stock in a transaction dated Thursday, August 27th. The stock was sold at an average price of $478.36, for a total value of $481,708.52. Following the completion of the sale, the insider owned 112,155 shares in the company, valued at $53,650,465.80. This represents a 0.89% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold a total of 25,436 shares of company stock worth $11,340,064 over the last three months. 0.20% of the stock is currently owned by company insiders.

Hedge Funds Weigh In On Western Digital

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

About Western Digital

Western Digital Corporation NASDAQ: WDC is a data storage technology company that develops and manufactures hard disk drives (HDDs) and related storage solutions. Its products are used in data centers, cloud infrastructure, enterprise systems, personal computers, gaming platforms and external storage devices.

The company offers HDD-based products for business and consumer applications, including high-capacity drives designed for hyperscale and cloud data centers, enterprise storage environments, network-attached storage systems and personal computing.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.