Core Thesis - Western Digital Corporation (WDC) presents a compelling investment case driven by disciplined execution, market leadership, and a strategic focus on high-capacity nearline HDDs [3] Financial Performance - In Q1FY26, WDC reported revenue of $2.82 billion, reflecting a 27% year-over-year increase, with non-GAAP EPS of $1.78 and a 30.4% operating margin [3] - Guidance for Q2FY26 anticipates sequential revenue growth to approximately $2.9 billion with mid-40s margins [4] Capital Management - The company plans a $0.125 dividend increase and $553 million in buybacks, demonstrating strong cash conversion and confidence in demand [4] - Management maintains disciplined capital expenditures at 4%–6% of revenue, avoiding new unit capacity while sustaining pricing power [6] Market Position and Growth Drivers - WDC has diversified exposure across Cloud, Client, and Consumer markets, with cloud leading revenue and margin gains [5] - Multi-year orders from hyperscale customers and a robust backlog provide visibility into revenue and margins through CY27, supporting structural growth in a previously cyclical industry [6] Valuation Insights - Valuation analyses indicate fair value in the high-$100s, with upside potential toward $250 if margin and technology milestones are met, while downside near $90 is mitigated by strong cash generation [7] - WDC's combination of operational discipline, technological innovation, and visible cash flows positions it as an attractive investment with asymmetrical upside potential [7]