Western Digital (NASDAQ:WDC) Shares Down 7.4% - What's Next?

Key Points

• Western Digital shares fell 7.4% to $496.16 amid higher Treasury yields, a broader selloff in memory stocks and renewed concerns about AI-related spending and valuations.
• The company’s fundamentals remain strong: quarterly EPS of $3.56 and revenue of $3.75 billion exceeded estimates, while revenue increased 43.8% year over year. Analysts maintain a “Moderate Buy” consensus with a $534.56 price target.
• Long-term support comes from strong storage demand, improving pricing and AI-driven cloud growth, but the sector remains vulnerable to its boom-and-bust cycle, supply changes and economic conditions.

Western Digital Corporation (NASDAQ:WDC - Get Free Report)'s share price dropped 7.4% during trading on Tuesday . The stock traded as low as $490.23 and last traded at $496.16. 9,262,249 shares changed hands during mid-day trading, an increase of 4% from the average session volume of 8,937,651 shares. The stock had previously closed at $536.01.

Key Stories Impacting Western Digital

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

• Positive Sentiment: Western Digital continues to benefit from strong storage demand, improving pricing and AI-related cloud growth. Analysts also point to favorable earnings-estimate revisions and a forecast-beating outlook as potential support for the long-term investment case. Can Strong End Markets and Pricing Tailwinds Keep WDC’s Momentum Alive
• Positive Sentiment: Memory and storage stocks rallied recently after Elon Musk highlighted a potential memory bottleneck, reinforcing expectations that AI infrastructure demand could remain constrained by limited supply. Western Digital also received support from broader sector momentum and positive commentary about its earnings outlook. SanDisk Rallies as Elon Musk Flags a Memory Bottleneck
• Neutral Sentiment: Recent coverage remains broadly bullish on momentum, with commentators including Jim Cramer arguing that demand for memory and storage tied to AI could support additional gains. However, the sector’s historical boom-and-bust cycle makes the outlook highly sensitive to supply, pricing and economic conditions. Jim Cramer Says It’s Not Too Late to Invest in Memory Stocks
• Negative Sentiment: Rising Treasury yields are pressuring high-growth technology shares and prompting investors to reduce exposure to the extended AI hardware trade. Memory and storage peers, including SanDisk and Micron, are also selling off, creating additional pressure on WDC. Higher Rates Test the Memory Boom
• Negative Sentiment: A Wall Street Journal report concerning potentially undisclosed or underestimated AI-related spending commitments has intensified caution around AI hardware valuations and accelerated the rotation away from memory stocks. WSJ Report Sends Memory Stocks Down

Wall Street Analysts Forecast Growth

Several brokerages recently issued reports on WDC. Barclays upped their price target on Western Digital from $450.00 to $620.00 and gave the stock an "overweight" rating in a report on Wednesday, May 27th. Wells Fargo & Company raised their price objective on Western Digital from $575.00 to $730.00 and gave the company an "overweight" rating in a research note on Friday, July 10th. Citigroup cut their price objective on shares of Western Digital from $800.00 to $740.00 and set a "buy" rating on the stock in a report on Friday, August 7th. Fox Advisors lowered shares of Western Digital from an "overweight" rating to an "equal weight" rating in a research note on Monday, June 22nd. Finally, Wall Street Zen downgraded shares of Western Digital from a "strong-buy" rating to a "buy" rating in a report on Sunday. Two research analysts have rated the stock with a Strong Buy rating, eighteen have assigned a Buy rating and five have given a Hold rating to the company's stock. Based on data from MarketBeat, the stock has a consensus rating of "Moderate Buy" and a consensus price target of $534.56.

Western Digital Stock Down 7.4%

The stock has a 50-day moving average of $556.51 and a 200 day moving average of $428.76. The company has a market capitalization of $171.02 billion, a PE ratio of 20.49 and a beta of 2.14.

Western Digital (NASDAQ:WDC - Get Free Report) last posted its quarterly earnings data on Wednesday, August 5th. The data storage provider reported $3.56 earnings per share for the quarter, topping the consensus estimate of $3.31 by $0.25. The business 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 was up 43.8% on a year-over-year basis. During the same quarter in the previous year, the firm earned $1.66 earnings per share. Western Digital has set its Q1 2027 guidance at 3.850-4.150 EPS. Equities analysts forecast that Western Digital Corporation will post 19.65 EPS for the current fiscal year.

Western Digital Announces Dividend

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

Insider Activity at Western Digital

In related news, insider Cynthia L. Tregillis sold 808 shares of Western Digital stock in a transaction that occurred on Tuesday, July 21st. The shares were sold at an average price of $529.63, for a total value of $427,941.04. Following the sale, the insider owned 114,539 shares of the company's stock, valued at approximately $60,663,290.57. The trade was a 0.70% decrease in their position. The transaction was disclosed in a document filed with the SEC, which can be accessed through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, 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 owned 575,966 shares in the company, valued at approximately $256,287,591.02. The trade was a 3.36% decrease in their position. 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 25,093 shares of company stock valued at $11,650,737 over the last quarter. 0.18% of the stock is currently owned by insiders.

Institutional Trading of Western Digital

Several hedge funds have recently made changes to their positions in WDC. Norges Bank bought a new stake in Western Digital in the 4th quarter valued at about $788,729,000. Northern Trust Corp boosted its position in Western Digital by 11.2% during the third quarter. Northern Trust Corp now owns 3,805,463 shares of the data storage provider's stock worth $456,884,000 after purchasing an additional 384,103 shares during the period. Soroban Capital Partners LP increased its stake in shares of Western Digital by 1,926.3% in the second quarter. Soroban Capital Partners LP now owns 3,061,134 shares of the data storage provider's stock worth $195,882,000 after purchasing an additional 2,910,062 shares in the last quarter. AQR Capital Management LLC raised its position in shares of Western Digital by 70.4% in the fourth quarter. AQR Capital Management LLC now owns 2,972,703 shares of the data storage provider's stock valued at $512,107,000 after purchasing an additional 1,228,661 shares during the period. Finally, UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC raised its position in shares of Western Digital by 6.0% in the fourth quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC now owns 2,809,409 shares of the data storage provider's stock valued at $483,977,000 after purchasing an additional 159,167 shares during the period. 92.51% of the stock is currently owned by institutional investors.

About Western Digital

Western Digital Corporation is a global data storage company that designs, manufactures and sells a broad range of storage devices and systems for personal, enterprise and cloud applications. Headquartered in San Jose, California, the company develops hard disk drives (HDDs), solid-state drives (SSDs), NAND flash components and finished storage products used in PCs, external storage, servers, network-attached storage (NAS) and embedded systems.

Its product portfolio spans consumer and commercial markets, including internal and external HDDs and SSDs, removable flash memory products and storage platforms for data center and enterprise environments.

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.

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