Core Viewpoint - Western Digital's shares have reached an all-time high following a price target increase from a benchmark, indicating strong market performance and investor confidence [1][5]. Company Performance - Western Digital's stock has surged over 125% year-to-date and is up more than 250% from its lows in April [1]. - The company is part of a strong memory and storage sector, alongside Seagate and Toshiba, which are also performing well [2][4]. Market Analysis - The tech sector shows a mix of significant winners and losers, with Western Digital and Seagate identified as clear winners in the memory and storage space [2][3]. - The overall tech sector has increased by approximately 24% over the past year, contrasting with declines in software and semiconductor segments [3]. Analyst Insights - Analysts have raised price targets for Western Digital, with the benchmark increasing its target to $115 from $85 while maintaining a buy rating [5]. - Other financial institutions, including Barclays, Citigroup, and Morgan Stanley, have also raised their price targets earlier this month [5]. Future Projections - Global hard drive shipments are projected to reach about 1,600 exabytes by 2025, highlighting the growing demand for data storage [6]. - The expected range for Western Digital's stock price in the near term is between $97 and $107, based on options activity [10]. Options Activity - The highest concentration of open interest for upcoming options expiration is in the 96 and 100 strike calls, with notable put activity at the 90 strike [11]. - A significant bearish trade was observed with 2,200 January 16th 80 strike puts and 2,500 October 3rd 95 strike puts, indicating some market participants are hedging against potential declines [14][15].

Financial Data and Key Metrics Changes - Total fiscal Q2 revenue was approximately $8.1 billion, down 8% sequentially but up 38% year over year [29] - Fiscal Q2 DRAM revenue was $6.1 billion, up 47% year over year, representing 76% of total revenue [29] - Fiscal Q2 NAND revenue was $1.9 billion, up 18% year over year, representing 23% of total revenue [30] - Consolidated gross margin for fiscal Q2 was 37.9%, down 160 basis points sequentially [33] - Non-GAAP diluted earnings per share in fiscal Q2 was $1.56, above the high end of the guidance range [34] Business Line Data and Key Metrics Changes - Compute and networking business unit revenue was up 4% sequentially to $4.6 billion, reaching 57% of total revenue [30] - Storage business unit revenue was $1.4 billion, down 20% sequentially due to lower storage investments from data center customers [31] - Mobile business unit revenue was $1.1 billion, down 30% sequentially as mobile customers improved their inventory positions [32] - Embedded business unit revenue was $1 billion, down 3% sequentially due to inventory improvement initiatives at automotive customers [32] Market Data and Key Metrics Changes - Micron achieved record high market share in data center SSDs in calendar Q4 2024, with revenue growth in each category [17] - The company projects mid-single digit server unit growth in calendar 2025, with strong demand for HBM [12] - AI PCs require a minimum of 16GB of DRAM, compared to the average 12GB last year, driving demand growth [18] Company Strategy and Development Direction - Micron is focused on growing HBM capacity in existing manufacturing facilities to meet requirements through 2026 [9] - The company is making disciplined investments to capitalize on growth opportunities driven by AI [9] - Micron's strategy includes maintaining supply discipline and managing capital investments to align with demand growth [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating current market dynamics with disciplined investments and a focus on high-value products [40] - The company anticipates record revenue and improved profitability in fiscal 2025, driven by strong demand for AI-related products [40] - Management noted that leading edge DRAM supply is tight due to increasing demand for HBM [66] Other Important Information - Fiscal Q2 operating cash flows were over $3.9 billion, with capital expenditures of $3.1 billion [34] - The company expects to maintain its bit share in DRAM and NAND in calendar 2025 [25] - Micron's capital spending plans remain unchanged at approximately $14 billion for fiscal 2025 [27] Q&A Session Summary Question: Will gross margins improve in fiscal Q4? - Management indicated that while fiscal Q3 gross margins are expected to be lower, they anticipate improvements in fiscal Q4 due to better market conditions and higher contributions from HBM [44][46] Question: What is driving the increased industry bit demand outlook for DRAM? - Management noted that improved customer inventories and the growing presence of AI in smartphones and PCs are contributing to the better demand profile [48][49] Question: How much of the fiscal Q3 revenue guidance increase is from DRAM versus NAND? - Management stated that DRAM, particularly from HBM and data center exposure, will be the primary driver of revenue growth in fiscal Q3 [54] Question: What is the outlook for inventory levels? - Management expects to reduce inventory days below the target of 120 days by fiscal Q4, driven by tighter conditions in DRAM [75] Question: How will HBM pricing dynamics evolve? - Management projected that HBM revenue will increase in the second half of calendar 2025 as the customer base expands and the transition to 12 high products occurs [83][84]