Western Digital Soars 5.75%—Is AI-Driven Storage the Next Gold Rush?

Summary
• Western Digital (WDC) surges 5.75% intraday, hitting a 52-week high of $90.90
• Morgan Stanley upgrades WDC to 'Overweight' with $99 price target, citing AI-driven storage demand
• Q2 earnings and revenue exceed estimates, with guidance above consensus

Western Digital’s explosive 5.75% rally has captured market attention, driven by a bullish analyst upgrade and robust earnings. The stock’s ascent reflects growing optimism in AI-driven storage demand, with Morgan Stanley’s $99 price target and the company’s outperforming Q2 results fueling momentum. Traders are now weighing whether this surge marks a sustainable inflection point for the data storage giant.

Bullish Analyst Upgrade and Earnings Outperformance Ignite Rally
Western Digital’s intraday surge is fueled by a confluence of technical and fundamental catalysts. Morgan Stanley analyst Erik Woodring raised the firm’s price target to $99 from $92, reiterating an Overweight rating after meetings with company executives. This follows Western Digital’s Q2 earnings of $1.66 per share on $2.61 billion in revenue, both surpassing analyst forecasts. The firm also issued September quarter guidance of $2.70 billion in revenue and $1.54 in EPS, exceeding consensus estimates. These results, coupled with the analyst’s confidence in WDC’s technology roadmap, have ignited investor enthusiasm.

Computer Hardware Sector Gains Momentum as WDC Leads AI-Driven Storage Charge
The Computer Hardware sector, led by Western Digital, is gaining traction amid AI-driven demand. Seagate Technology (STX), a key peer, rose 3.79% intraday, reflecting sector-wide optimism. WDC’s 30% YoY revenue growth and 41% gross margin outpace industry averages, positioning it as a key beneficiary of hyperscaler and cloud storage expansion. The sector’s top 18% Zacks ranking underscores its strategic relevance in the AI era, with WDC’s technological edge in HDD innovation and debt reduction further differentiating it from peers.

Options Playbook: Leverage Gamma and IV for AI-Driven Gains
• 200-day average: 58.98 (well below current price)
• RSI: 76.20 (overbought)
• MACD: 3.28 (bullish divergence)
• Bollinger Bands: Price at 84.08 (upper band), 77.52 (middle), 70.97 (lower)
• Support/Resistance: 68.82–69.16 (30D support), 63.82–64.93 (200D support)

Western Digital’s technicals paint a bullish picture, with price action near the 52-week high of $90.90 and a Golden Cross reinforcing the uptrend. Key levels to watch include the 200-day average (58.98) and the 30-day support (68.82). Short-term traders should monitor overbought RSI (76.20) for potential pullbacks, while long-term bulls can target Morgan Stanley’s $99 price target. The absence of leveraged ETFs means options are the primary vehicle for leveraged exposure.

Top Options Picks:
• WDC20250912C90
- Type: Call
- Strike Price: $90
- Expiration: 2025-09-12
- IV: 37.34% (moderate)
- Leverage Ratio: 39.92% (high)
- Delta: 0.534 (moderate sensitivity)
- Theta: -0.326 (rapid time decay)
- Gamma: 0.075 (high sensitivity to price changes)
- Turnover: 25,872 (high liquidity)
- Payoff at 5% Upside (94.85): $4.85/share
- Why: High leverage and gamma make this ideal for a 5% move, with liquidity ensuring smooth entry/exit.

• WDC20250912C92
- Type: Call
- Strike Price: $92
- Expiration: 2025-09-12
- IV: 35.53% (moderate)
- Leverage Ratio: 69.93% (very high)
- Delta: 0.3797 (moderate sensitivity)
- Theta: -0.257 (rapid time decay)
- Gamma: 0.0756 (high sensitivity to price changes)
- Turnover: 15,110 (high liquidity)
- Payoff at 5% Upside (94.85): $2.85/share
- Why: Exceptional leverage ratio and gamma for aggressive bulls, with sufficient liquidity to manage risk.

Aggressive bulls should consider WDC20250912C90 into a break above $90.90, while WDC20250912C92 offers high-reward potential for a sustained move toward $99.

Backtest Western Digital Stock Performance

Ride the AI-Driven Wave—But Watch for Overbought Caution
Western Digital’s 5.75% intraday surge is a testament to its AI-driven storage dominance and technical strength. With the Golden Cross confirmed and Morgan Stanley’s $99 target in sight, the stock appears poised for further gains. However, overbought RSI (76.20) and a 52-week high near $90.90 suggest caution for short-term traders. Sector leader Seagate (STX) rising 3.79% reinforces the industry’s momentum. Investors should monitor the $90.90 level for a breakout confirmation and consider the WDC20250912C90/92 options for leveraged exposure. Aggressive bulls may ride the wave, but conservative traders should wait for a pullback to 68.82–69.16 before entering long positions.