WDC vs. NTAP: Which Data Storage Stock Offers Better Growth Potential?

Industry Overview - The data-storage sector is experiencing significant growth driven by cloud migration, AI/ML workloads, and edge devices, with a projected CAGR of 17.2%, reaching $774 billion by 2032 from $255.3 billion in 2025 [2][3] - The cloud storage segment is expected to dominate the market due to its scalability and cost-effectiveness, while the healthcare sector is anticipated to have the highest CAGR due to increasing unstructured data [2] Company Analysis: Western Digital Corporation (WDC) - WDC is a key player in the global data infrastructure, focusing on hardware storage solutions like HDDs and SSDs, and is committed to technological improvements to enhance product density, speed, energy efficiency, and cost-effectiveness [4][5] - The company is leveraging AI technology to drive growth, with a new 25,600-square-foot System Integration and Test Lab to accelerate product development and testing [5] - WDC expects non-GAAP revenues of $2.7 billion for the fiscal first quarter, reflecting a 22% year-over-year increase, and anticipates gross margins of 41-42% [6][8] - The company has reduced its debt by $2.6 billion, achieving a net leverage target of 1–1.5x, and is focused on enhancing shareholder value through dividends and buybacks [10][8] Company Analysis: NetApp Inc. (NTAP) - NTAP is positioned to drive growth in data infrastructure, focusing on AI and cloud solutions, with strong demand for its all-flash portfolio and modern data infrastructure [11][16] - The company reported an 80% revenue increase in its Keystone storage-as-a-service, and its Public Cloud segment is benefiting from healthy traction in hyperscaler services [18][19] - NTAP returned $404 million to shareholders in the fiscal first quarter and $1.57 billion for the fiscal year through dividends and share repurchases [19] - Despite challenges from macroeconomic uncertainty and cautious IT spending, NTAP is experiencing strong demand for its AI and data lake solutions [20][12] Performance Comparison - Over the past year, WDC's stock has increased by 116.5%, while NTAP's stock has declined by 1% [23] - In terms of valuation, NTAP trades at a forward price/sales ratio of 3.3, lower than WDC's 4.21 [24] - The Zacks Consensus Estimate for WDC's earnings for fiscal 2026 has been revised up by 2.6% to $6.67, while NTAP's estimate has increased by 0.26% to $7.77 [27][29] Investment Outlook - Both WDC and NTAP are well-positioned to capitalize on the emerging data storage industry, with WDC currently rated as a Strong Buy and NTAP as a Hold according to Zacks Rank [30]