Why Western Digital (WDC) Is Among the Top Undervalued Tech Stocks to Buy According to Hedge Funds?

As an investor, you're always on the lookout for undervalued stocks that have the potential to deliver significant returns. One tech stock that has caught the attention of hedge funds and analysts alike is Western Digital (WDC). In this article, we'll explore why Western Digital is considered one of the top undervalued tech stocks to buy, based on the insights of hedge funds and market analysts.



Firstly, let's take a look at the fundamentals of Western Digital. The company is a leading provider of data storage devices and solutions, with a strong presence in the global market. Western Digital's product portfolio includes hard disk drives (HDDs) and solid-state drives (SSDs) for various applications, such as desktop and notebook personal computers, gaming consoles, and set-top boxes. Additionally, the company offers flash-based embedded storage products for mobile phones, tablets, notebook PCs, and other portable and wearable devices, as well as automotive and Internet of Things (IoT) applications.

Now, let's dive into the reasons why hedge funds and analysts believe Western Digital is undervalued:

1. Analyst Consensus and Price Targets: The average analyst rating for WDC stock from 21 stock analysts is "Buy," indicating that analysts believe this stock is likely to outperform the market over the next twelve months. The 12-month stock price forecast is $87.16, which is an increase of 34.86% from the latest price of $64.63. This suggests that the stock is undervalued and has significant upside potential.
2. Revenue and Earnings Growth: Western Digital's revenue and earnings have shown significant growth over the past few years. In 2024, Western Digital's revenue was $13.00 billion, an increase of 5.56% compared to the previous year's $12.32 billion. Losses were -$852.00 million, -50.12% less than in 2023. This growth trend may not be fully reflected in the current stock price, contributing to its undervalued status.
3. Strategic Alternatives: Western Digital is currently reviewing strategic alternatives aimed at further optimizing long-term value for its shareholders. This process may involve potential acquisitions, divestments, or other strategic moves that could unlock shareholder value. Hedge funds may see this as an opportunity to invest in the company at a discounted price before any potential value-creating transactions are announced.
4. Investment by Apollo and Elliott: The investment by funds managed by affiliates of Apollo Global Management and Elliott Investment Management in Western Digital's convertible preferred stock may signal to hedge funds that these experienced capital investors see value in the company. This investment strengthens Western Digital's financial position and flexibility, which could further enhance its undervalued status.



In conclusion, Western Digital's fundamentals, analyst ratings, and strategic initiatives make a strong case for the company being one of the top undervalued tech stocks to buy according to hedge funds. With a compelling growth story, a strong product portfolio, and the backing of experienced capital investors, Western Digital is well-positioned to deliver significant returns to investors. As always, it's essential to conduct thorough research and consider your risk tolerance before making any investment decisions.