Western Digital Stock Slumps Despite Earnings Beats as Analyst Sees Huge Upside
Western Digital shares fell 32% over three months even though the company beat earnings estimates five consecutive times. Melius analyst Ben Reitzes has a Street-high $1,050 price target, implying 175.8% upside, while the average Wall Street target is $668.50. Toshiba's plan to double hard-disk-drive capacity by fiscal 2027 and competition for TDK's magnetic-heads business have raised supply concerns.
Western Digital now focuses solely on hard disk drives after separating its flash unit into Sandisk in early 2025. Management estimates that about four-fifths of hyperscale data-center stored data sits on HDDs, tying the company to AI storage demand.
The shares have dropped 32.4% in three months, from $563.14, and fell 7.38% in a week while the S&P 500 barely moved. Toshiba's reported ¥60 billion investment to double HDD capacity by fiscal 2027, plus competition for TDK's magnetic-heads unit, has fueled supply worries.
Western Digital's volatility may affect investors, employees, and suppliers tied to the hard-drive industry. If Toshiba's capacity expansion and magnetic-head competition pressure pricing, data-center operators and cloud users could see cheaper storage, while Western Digital's margins, hiring, and research spending may face strain. Broader AI-driven storage demand could keep the sector strategically important, but rapid share-price swings may also influence retirement funds and market confidence. This remains uncertain and depends on execution, demand, and competitive responses.