Bull of the Day: Western Digital (WDC)

Western Digital Corporation, a Zacks Rank #1 (Strong Buy), has seen its shares surge over the past year as the company benefits from an accelerating transformation driven by artificial intelligence and explosive demand for storage solutions. The company is a leader in enterprise hard disk drives (HDDs) and nearline storage.The stock broke out to an all-time high in 2025 on increasing volume. Shares continue to display relative strength as buying pressure accumulates in this market leader.Western Digital is part of the Zacks Computer – Storage Devices industry group, which currently ranks in the top 7% out of approximately 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform over the next 3 to 6 months, just as it has over the past year:Image Source: Zacks Investment ResearchTake note of the favorable characteristics for this group below. Stocks in this industry are relatively undervalued based on traditional valuation metrics. They are also projected to experience above-average earnings growth, which signifies a powerful combination that should lead to higher prices in the future.Image Source: Zacks Investment ResearchHistorical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.Company DescriptionWestern Digital manufactures and sells data storage devices and solutions based on HDD technology in the United States, Asia, Europe, the Middle East, and Africa. The company offers internal HDDs, data center drives and platforms, as well as external and portable drives.In a year where artificial intelligence reshaped the technology landscape, few companies captured the momentum quite like Western Digital. Innovations such as UltraSMR and heat-assisted magnetic recording have enabled the company to ship industry-leading 30TB+ drives tailored for AI data lakes. Strong free cash flow generation and a fortified balance sheet provide additional financial flexibility as the company capitalizes on multi-year hyperscaler buildouts.The storage specialist, a standout in the Zacks Computer – Storage Devices industry, witnessed its shares surge nearly 300% last year, significantly outperforming both the broader market and its peers. And the industry's tailwinds are just getting started. AI-powered storage markets are exploding—from $30.27 billion in 2025 to a projected $187.61 billion by 2035 at a 20% compounded annual growth rate. Data center operators and hyperscalers continue to expand infrastructure at an unprecedented pace, driving sustained demand for the company’s HDD solutions.Earnings Trends and Future Estimates What stands out is Western Digital’s consistent ability to deliver positive earnings surprises; the storage provider has exceeded EPS estimates in each of the past 11 quarters. The company delivered a trailing four-quarter average surprise of over 9%, reflecting strong execution in converting AI-driven demand into results. This track record aligns perfectly with the power of the Zacks Rank system, which prioritizes stocks showing upward earnings revisions.Western Digital’s transformation has been remarkable. The company reported fiscal first-quarter results back in October that exceeded expectations, with adjusted EPS of $1.78 beating the Zacks Consensus Estimate by nearly 12%. Revenue of $2.8 billion topped forecasts by about 4%. Increasing sales in the cloud end market are being driven by solid demand for higher-capacity nearline products.The California-based company has been the beneficiary of improving earnings estimate revisions as of late. Looking into fiscal 2026, analysts have raised their annual EPS estimates by 0.39% in the past 60 days. The Zacks Consensus Estimate now stands at $7.66 per share, reflecting better than 55% growth relative to the prior year.Image Source: Zacks Investment ResearchLet’s Get TechnicalWestern Digital WDC was the second-best performer in the S&P 500 last year. Only stocks that are in extremely powerful uptrends are able to make this type of price move and widely outperform the market. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.Image Source: StockChartsNotice how shares remain above upward-sloping 50-day (blue line) and 200-day (red line) moving averages. The momentum appears to be carrying over into 2026. With both strong fundamentals and technicals, Western Digital stock is poised to continue its outperformance.Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Western Digital has recently witnessed positive revisions. As long as this trend remains intact (and WDC continues to deliver earnings beats), the stock will likely continue its bullish run throughout this year.Bottom LineBacked by a leading industry group and robust history of earnings beats, it’s not difficult to see why this company is a compelling investment. Currently, WDC carries a Zacks Rank #1 (Strong Buy), driven by favorable estimate momentum.Solid institutional buying should continue to provide a tailwind for the stock price. Robust fundamentals combined with a strong technical trend certainly justify adding shares to the mix. 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Click to get this free report Western Digital Corporation (WDC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks