Western Digital Stock Soars 280% This Year. Is WDC Worth Chasing Now?

Core Insights - Western Digital (WDC) stock has surged nearly 280% this year, making it the top performer in the S&P 500 Index, primarily driven by strong AI-driven demand for its storage solutions [1] - The foundation of the AI technological revolution relies heavily on hardware, particularly data storage, where Western Digital excels by designing and manufacturing HDD-based storage devices [2] Industry Demand - As AI adoption accelerates globally, data centers and cloud service providers are competing to secure high-capacity drives, leading to increased prices and favorable conditions for storage manufacturers like Western Digital [3] - The demand for massive storage capacity is rapidly increasing as hyperscalers invest in AI and data-intensive applications, further supporting the need for Western Digital's high-capacity drives [6] Financial Performance - In fiscal 2025, Western Digital's revenue rose by 51%, with a significant expansion in gross margin due to higher average selling prices and stronger demand [4] - In the first quarter of fiscal 2026, revenue increased by 27% year-over-year, and adjusted gross margin widened by 660 basis points, with adjusted earnings per share soaring 137% compared to the same period last year [4] Valuation and Growth Potential - Despite strong demand, Western Digital's valuation remains attractive relative to its earnings growth trajectory, indicating potential for further stock appreciation [5] - The company's exposure to the expanding AI ecosystem and improving fundamentals suggest continued growth prospects in 2026 and beyond [6]