Core Viewpoint - Western Digital (WDC) has shown strong stock performance, with a 24.9% increase over the past month and a 59.4% rise since the beginning of the year, outperforming both the Zacks Computer and Technology sector and the Zacks Computer-Storage Devices industry [1] Financial Performance - The company has consistently exceeded earnings expectations, reporting an EPS of $1.66 against a consensus estimate of $1.48 in its last earnings report on July 30, 2025 [2] - For the current fiscal year, Western Digital is projected to achieve earnings of $6.5 per share on revenues of $10.92 billion, reflecting a 31.85% increase in EPS but a 17.76% decrease in revenues [3] - In the next fiscal year, earnings are expected to rise to $7.11 per share on revenues of $11.28 billion, indicating a year-over-year change of 9.38% in EPS and 3.32% in revenues [3] Valuation Metrics - The stock currently trades at 14.6 times the current fiscal year EPS estimates, below the peer industry average of 15.9 times [7] - On a trailing cash flow basis, the stock trades at 15.7 times compared to the peer group's average of 17 times, with a PEG ratio of 1.06 [7] Zacks Rank and Style Scores - Western Digital holds a Zacks Rank of 1 (Strong Buy) due to rising earnings estimates, which is a favorable indicator for investors [8] - The company has a Value Score of C, a Growth Score of B, and a Momentum Score of C, resulting in a combined VGM Score of B [6]

Core Insights - The article highlights the dominance of the "Magnificent Seven" in AI investing, suggesting that there are other underappreciated AI investment opportunities available [2][4]. Group 1: AI Investment Landscape - Many investors are primarily aware of large-cap AI stocks, limiting their knowledge to a few prominent names [1][2]. - The Invesco NASDAQ Next Gen 100 ETF (QQQJ) is presented as a viable option for investors seeking exposure to lesser-known AI equities [3][4]. Group 2: Notable Companies in QQQJ - Seagate Technologies (STX) and Western Digital (WDC) are identified as two stocks that merit more attention in the AI space, collectively representing nearly 4% of QQQJ's holdings [5][6]. - Seagate's nearline hard drives are crucial for hyperscale cloud storage, with contracts extending visibility into mid-2026, ensuring stable revenue streams for cloud service providers [6][7]. - Western Digital is positioned well in the AI storage market, with its agentic AI initiatives being recognized as a significant growth area [6][7].

Core Insights - The rise of artificial intelligence (AI) has significantly boosted the stock performance of companies like Palantir Technologies and Seagate Technology, with Palantir's stock increasing by 2,500% since the start of 2023 and Seagate's stock gaining 121.4% in 2025 alone [2][7]. Company Performance - Palantir Technologies has integrated generative AI into its software, leading to soaring sales and profits, with a notable 120.7% rise in stock value in 2025 [2]. - Seagate Technology has experienced a surge in demand for nearline storage, shipping 137 exabytes of capacity last quarter, which is a 14% sequential increase and a 52% year-over-year increase [8]. - Seagate's revenue grew by 39% in fiscal 2025, with gross profit margin expanding from 23.4% to 35.2% year-over-year, and an impressive fourth-quarter gross margin of 37.4% [8]. Market Dynamics - The demand for data center storage is expected to rise significantly, from $13 billion in 2024 to $23 billion by 2028, indicating a prolonged growth cycle for companies like Seagate and Western Digital [10]. - Seagate and Western Digital are the two major suppliers of hard drives, both benefiting from the current demand cycle, which has led to strong gross margin expansion [9]. Competitive Landscape - Seagate has developed a technology lead with its heat-assisted magnetic recording (HAMR) process, which is expected to enable the production of 40TB hard drives by the second half of fiscal 2026, while Western Digital is lagging behind by about six months [13]. - The competition between Seagate and Western Digital typically keeps pricing low, but the current demand cycle has allowed for margin expansion [12]. Valuation Considerations - Seagate's forward price-to-earnings (P/E) ratio is 18.5, which is considered attractive compared to Palantir's 245 times earnings multiple, suggesting Seagate may be undervalued [14]. - Both Seagate and Western Digital are trading at a premium to their historical pricing, indicating that it may be prudent to wait for a better entry point before investing [16].

PresentationOkay. Let's get started. Good afternoon, everybody. Welcome to the Goldman Sachs Communacopia Technology Conference. My name is Jim Schneider. I'm the semiconductor analyst here at Goldman Sachs. It's my pleasure to welcome Western Digital and CFO, Kris Sennesael, to have this with us today. Thank you, Kris, for being here. I appreciate it.Kris SennesaelChief Financial Officer Yes. Jim, thanks for having us here at the Goldman Sachs conference. And maybe before we start, I'll just make a small d ...

Group 1 - The Goldman Sachs Communacopia Technology Conference features Western Digital and its CFO, Kris Sennesael, discussing the company's outlook and performance [1] - The CFO will provide forward-looking statements based on current assumptions regarding the product portfolio, business plans, market trends, and future financial results [2] - There are risks and uncertainties associated with these forward-looking statements, and stakeholders are encouraged to refer to the company's recent financial reports for more information [3]

Summary of Western Digital Conference Call Company Overview - **Company**: Western Digital (NasdaqGS: WDC) - **Event**: Goldman Sachs Communicopia and Technology Conference - **Date**: September 10, 2025 Key Industry Insights - **Demand-Supply Dynamics**: The demand environment is strong and improving, with a misconception about a significant demand-supply imbalance. Supply is tight, but Western Digital believes it can meet demand effectively [6][9] - **Growth Forecast**: The storage business is projected to grow at a compound annual growth rate (CAGR) of 15% to 23% from 2024 to 2028, driven by AI advancements [7] - **Areal Density**: Growth will primarily come from increasing areal density rather than unit capacity. Current average capacity is around 21-22 terabytes per unit, with plans to increase to 36 and eventually 44 terabytes [8][12] Pricing and Market Conditions - **Stable Pricing Environment**: The average selling price (ASP) per terabyte has remained stable, with fluctuations of about ±1% over recent quarters. Long-term agreements (LTAs) with major customers provide visibility into pricing stability [13][14] - **Customer Commitments**: Four out of five largest customers have purchase orders for all of fiscal 2026, indicating strong demand and pricing stability [14] Competitive Landscape - **HDD vs. SSD**: Approximately 80% of installed storage capacity is hard disk drives (HDD), with HDDs being six times lower in acquisition cost and 3.6 times lower in total cost of ownership (TCO) compared to SSDs. Both HDD and SSD markets are growing [19][20][21] - **Market Share**: Western Digital is focused on customer relationships rather than market share, emphasizing quality and reliability in their products [22][23] Technology and Product Development - **EPMR and HAMR Technologies**: Ultra-SMR technology accounts for 40-45% of nearline shipments, expected to rise to 50% by the end of 2025. The next generation of EPMR is set for qualification in 2026, with HAMR technology ramping in 2027 [24][25][28][30] - **Quality Assurance**: Emphasis on ensuring quality and reliability before ramping up production of new technologies [27][30] Financial Performance - **Revenue Composition**: Cloud business constitutes approximately 90% of total revenue, while client and consumer segments account for about 10%. The latter is expected to grow but at a slower rate than cloud [33] - **Gross Margins**: Current gross margins are in the low 40s, with potential for further improvement driven by stable pricing, cost reductions, and a favorable product mix [37][38][39] - **Debt and Capital Return**: The company has a net debt of $2.6 billion with a target leverage ratio of 1 to 1.5. Plans for capital return include a dividend program and a $2 billion share buyback initiative [48][50] Strategic Outlook - **Long-term Growth**: Western Digital is positioned well for future growth, particularly in the AI and data-centric cloud markets, with strong customer engagements and a focus on technological advancements [32][34][43]

Core Viewpoint - Western Digital (WDC) has gained significant attention in the market, with a notable stock performance increase of +24.5% over the past month, outperforming the S&P 500 composite and the Computer-Storage Devices industry [2][16] Earnings Estimates - For the current quarter, Western Digital is projected to report earnings of $1.57 per share, reflecting a decrease of -11.8% year-over-year, with the consensus estimate remaining unchanged [5] - The consensus earnings estimate for the current fiscal year stands at $6.5, indicating a growth of +31.9% from the previous year, also unchanged over the last 30 days [5] - For the next fiscal year, the earnings estimate is $7.11, suggesting a growth of +9.4% compared to the prior year, with no changes in the estimate over the past month [6] Revenue Growth Forecast - The consensus sales estimate for the current quarter is $2.7 billion, indicating a significant decline of -34% year-over-year [9] - For the current fiscal year, revenue estimates are $10.92 billion, reflecting a decrease of -17.8%, while the next fiscal year's estimate of $11.28 billion shows a modest increase of +3.3% [9] Last Reported Results and Surprise History - In the last reported quarter, Western Digital achieved revenues of $2.61 billion, down -30.8% year-over-year, with an EPS of $1.66 compared to $1.44 a year ago [10] - The company exceeded the Zacks Consensus Estimate for revenues by +6.13% and for EPS by +12.16% [10] - Western Digital has consistently beaten consensus EPS estimates in the last four quarters and topped revenue estimates three times during this period [11] Valuation - Western Digital holds a Zacks Value Style Score of C, indicating that it is trading at par with its peers [15] - The assessment of valuation multiples such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF) is essential for determining the stock's fair value relative to its historical values and peers [13][14] Bottom Line - The Zacks Rank 1 (Strong Buy) for Western Digital suggests a potential for outperforming the broader market in the near term, despite the mixed signals from earnings and revenue estimates [7][16]

Core Viewpoint - Western Digital (WDC.US) has seen its stock price rise over 4% to a record high of $89.59, driven by a price surge in the storage industry due to supply-demand imbalances and strong demand from AI applications [1] Industry Summary - The storage industry is currently experiencing a price increase, primarily influenced by production cuts leading to supply-demand imbalances and robust demand from artificial intelligence applications [1] - The demand for storage is surging in sectors such as data centers, AI servers, AI PCs, and smart vehicles, prompting storage chip manufacturers to implement production cuts and price hikes to adapt to market changes [1] - The recovery trend in the storage market is expected to continue until 2025 or even 2026 [1] Company Summary - Morgan Stanley has maintained a buy rating on Western Digital and raised its target price from $92 to $99 [1]

Group 1 - Western Digital (WDC.US) shares rose over 4% to $89.59, reaching a new all-time high [1] - The storage industry is experiencing a price increase driven by supply-demand imbalance due to production cuts and strong demand from AI applications, particularly in NAND flash and DRAM products [1] - This upward trend in the storage market is expected to continue until 2025 or even 2026 [1] Group 2 - There is a surge in demand for storage in data centers, AI servers, AI PCs, and smart vehicles, prompting storage chip manufacturers to implement production cuts and price hikes [1] - Morgan Stanley maintained a buy rating on Western Digital and raised its target price from $92 to $99 [1]

PresentationAsiya MerchantVP & Analyst Here because we're always running short on time. It's busy. It's day 1 of our Global TMT conference. It feels like the afternoon already. But -- really pleased here to have Irving and Kris, both -- as well as WDC's IR, who are here in the audience. This is expected to be an open fireside. So we have some questions. But before we kick things off, I'd like to hand it over to WDC first for some prepared commentary, and then we can kick it off with some questions. So welco ...