Western Digital (NASDAQ:WDC) Stock Price Down 3.5% - Should You Sell?

Key Points

• Western Digital shares fell 3.5% to $411.96 amid broader weakness in AI-related memory and storage stocks, profit-taking after a strong run, and concerns about potential dilution from the redemption of $109.5 million in convertible notes.
• The company’s fundamentals remain strong: quarterly EPS of $3.56 and revenue of $3.75 billion exceeded estimates, revenue grew 43.8% year over year, and management guided to next-quarter EPS of $3.85–$4.15. AI-driven data growth is viewed as a potential multiyear demand catalyst.
• Analysts maintain a generally positive outlook, with a consensus rating of “Moderate Buy” and an average price target of $534.56, although targets vary widely. Risks include slower next-generation drive deployment, competition with Seagate, insider selling, and the stock trading below its 50-day and 200-day moving averages.

Western Digital Corporation (NASDAQ:WDC - Get Free Report) shares fell 3.5% during mid-day trading on Tuesday . The stock traded as low as $407.12 and last traded at $411.96. 7,555,081 shares changed hands during mid-day trading, a decline of 12% from the average daily volume of 8,597,655 shares. The stock had previously closed at $426.94.

Western Digital News Summary

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

• Positive Sentiment: Western Digital continues to benefit from strong fundamentals. Its latest quarterly results exceeded earnings and revenue estimates, with revenue rising 43.8% year over year, and management issued quarterly EPS guidance of $3.85–$4.15. The stock had also gained substantially over the prior six months, reflecting optimism about storage demand. Western Digital Buy Sell or Hold Post Q2 Earnings
• Positive Sentiment: Western Digital is emphasizing its role in AI data storage and plans to highlight its technology at the AI Infrastructure Summit. Growing data volumes from AI workloads remain a potential multiyear demand driver for hard drives and storage systems. Western Digital AI Infrastructure Summit
• Neutral Sentiment: Fidelity’s Dividend Growth Fund identified Western Digital as a top relative contributor in its second-quarter portfolio update, offering institutional support but not representing a new company-specific catalyst. Western Digital Fund Contributor
• Negative Sentiment: Western Digital announced the redemption of all $109.5 million outstanding principal of its 3% convertible notes due 2028. Although the redemption reduces future debt, investors are focused on the possibility of conversion-related dilution and the use of cash, contributing to selling pressure. Why Western Digital Stock Is Trading Lower
• Negative Sentiment: Broader weakness in AI memory and storage stocks is weighing on WDC, with investors taking profits after its strong run. Comparisons with Seagate also raise concerns that Western Digital may be slower to deploy next-generation drives and secure hyperscale AI contracts. Seagate Versus Western Digital AI Storage Demand

Analysts Set New Price Targets

A number of research firms recently issued reports on WDC. Citigroup dropped their target price on shares of Western Digital from $800.00 to $740.00 and set a "buy" rating for the company in a research report on Friday, August 7th. Cantor Fitzgerald upped their target price on Western Digital from $660.00 to $900.00 and gave the stock an "overweight" rating in a research report on Monday, June 29th. TD Cowen increased their target price on Western Digital from $500.00 to $540.00 and gave the company a "buy" rating in a research note on Thursday, August 6th. Jefferies Financial Group set a $575.00 price target on shares of Western Digital in a research note on Tuesday, May 26th. Finally, Mizuho set a $590.00 price objective on Western Digital in a report on Thursday, August 6th. Two equities research analysts have rated the stock with a Strong Buy rating, seventeen have issued a Buy rating and six have issued a Hold rating to the company. According to data from MarketBeat.com, the company presently has an average rating of "Moderate Buy" and an average target price of $534.56.

Western Digital Stock Performance

The stock has a 50 day moving average of $490.38 and a 200 day moving average of $454.34. The stock has a market capitalization of $142.00 billion, a P/E ratio of 17.02, a P/E/G ratio of 1.90 and a beta of 2.13.

Western Digital (NASDAQ:WDC - Get Free Report) last released 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 company had revenue of $3.75 billion for the quarter, compared to analysts' expectations of $3.70 billion. Western Digital had a return on equity of 48.15% and a net margin of 72.95%.The business's revenue for the quarter was up 43.8% compared to the same quarter last year. During the same quarter in the previous year, the company posted $1.66 earnings per share. Western Digital has set its Q1 2027 guidance at 3.850-4.150 EPS. On average, research analysts anticipate that Western Digital Corporation will post 19.65 EPS for the current fiscal year.

Western Digital Announces Dividend

The business also recently declared a quarterly dividend, which will be paid on Thursday, September 17th. Shareholders of record on Tuesday, September 8th will be given a dividend of $0.15 per share. This represents a $0.60 dividend on an annualized basis and a dividend yield of 0.1%. The ex-dividend date is Tuesday, September 8th. Western Digital's payout ratio is 2.48%.

Insider Transactions at Western Digital

In other news, CEO Irving Tan sold 20,000 shares of the 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 trade represents a 3.36% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the SEC, which is accessible through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Vidyadhara Gubbi sold 1,795 shares of the firm's stock in a transaction that occurred on Friday, September 4th. The shares were sold at an average price of $459.87, for a total transaction of $825,466.65. Following the transaction, the insider owned 80,571 shares in the company, valued at $37,052,185.77. This represents a 2.18% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. In the last three months, insiders sold 25,437 shares of company stock valued at $11,461,345. Company insiders own 0.18% of the company's stock.

Hedge Funds Weigh In On Western Digital

Several hedge funds have recently modified their holdings of the company. ABS Direct Equity Fund LLC lifted its holdings in Western Digital by 112.8% in the second quarter. ABS Direct Equity Fund LLC now owns 1,277 shares of the data storage provider's stock valued at $816,000 after buying an additional 677 shares during the period. Sequoia Financial Advisors LLC grew its holdings in Western Digital by 3.5% during the 2nd quarter. Sequoia Financial Advisors LLC now owns 17,263 shares of the data storage provider's stock worth $11,026,000 after acquiring an additional 579 shares during the period. MCF Advisors LLC grew its holdings in Western Digital by 480.4% during the 2nd quarter. MCF Advisors LLC now owns 296 shares of the data storage provider's stock worth $189,000 after acquiring an additional 245 shares during the period. Archford Capital Strategies LLC bought a new stake in shares of Western Digital during the 2nd quarter valued at $384,000. Finally, WINTON GROUP Ltd lifted its stake in shares of Western Digital by 1.3% in the 2nd quarter. WINTON GROUP Ltd now owns 24,252 shares of the data storage provider's stock valued at $15,490,000 after purchasing an additional 315 shares during the period. 92.51% of the stock is currently owned by institutional investors and hedge funds.

About Western Digital

Western Digital Corporation NASDAQ: WDC develops, manufactures and sells data storage products and solutions for data centers, cloud service providers, enterprises, businesses and consumers. Its portfolio is centered on hard disk drives (HDDs), including high-capacity enterprise drives used in cloud and data center environments, as well as products for network-attached storage, surveillance and personal computing.

The company markets products under brands including Western Digital, WD, WD_BLACK and Ultrastar.

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