Western Digital Soared 9.7%—Is This the Dawn of a New Storage Era?

Summary
• Western Digital (WDC) surged 9.7% intraday, hitting a 52-week high of $78.7994.
• Q4 revenue jumped 30% to $2.61 billion, with cloud segment growth up 36%.
• A $2 billion share repurchase program and new quarterly dividend fueled optimism.

Western Digital’s meteoric rise reflects a perfect storm of earnings outperformance, strategic capital allocation, and surging demand for high-capacity storage. With cloud computing and generative AI driving demand, the stock’s 9.7% gain underscores investor confidence in its ability to capitalize on the data storage boom.

Earnings Surge and Strategic Moves Ignite Investor Optimism
Western Digital’s 9.7% intraday jump was driven by Q4 fiscal 2025 results that far exceeded expectations. Revenue surged 30% year-over-year to $2.61 billion, with cloud segment revenue climbing 36% to $2.3 billion, reflecting strong demand from hyperscale clients. The company also announced a $2 billion share repurchase program and a new quarterly dividend, signaling confidence in its balance sheet. Analysts raised price targets, with Rosenblatt lifting its target to $90 from $53. These moves, combined with the broader AI-driven storage tailwind, created a powerful catalyst for the rally.

Data Storage Sector Gains Momentum as Seagate Trails Behind
The data storage sector showed mixed momentum, with Western Digital outpacing peers like Seagate Technology (STX), which gained 5.63% intraday. Sector-wide, demand for high-capacity drives remains robust, driven by AI and cloud computing. Micron’s recent launch of PCIe Gen6 SSDs and the Supermicro Open Storage Summit highlighted industry innovation. However, Western Digital’s strategic capital allocation and earnings visibility position it as a clear leader in the sector’s current upcycle.

Capitalizing on WDC’s Bullish Momentum: ETFs and Options Playbook
• 200-day average: $57.74 (well below current price)
• RSI: 75.02 (overbought territory)
• MACD: 2.79 (positive) with a negative histogram (-0.08), signaling potential near-term correction
• Bollinger Bands: Price trading near upper band ($71.35), suggesting overbought conditions

Western Digital’s technicals point to a strong short-term bullish trend, with the stock breaking above key resistance levels. The 52-week high at $78.7994 and a 200-day average of $57.74 suggest a healthy upward trajectory. However, the overbought RSI (75.02) and narrowing MACD histogram hint at potential near-term profit-taking. Investors should monitor the $73.3465 middle Bollinger Band as a dynamic support level.

Top Option 1: WDC20250808C80
• Strike Price: $80 | Expiration: 2025-08-08
• IV: 35.80% (moderate volatility)
• Leverage Ratio: 65.51% (high potential return)
• Delta: 0.3955 (moderate sensitivity)
• Theta: -0.2352 (significant time decay)
• Gamma: 0.0872 (responsive to price swings)
• Turnover: 23,375 (high liquidity)
• 5% Upside Payoff: $4.12 (max(0, 82.28 - 80))
This contract offers a compelling risk/reward profile, with high leverage and moderate delta positioning it to benefit from continued upward momentum while managing time decay risks. Its high turnover ensures ease of entry/exit.

Top Option 2: WDC20250808C82
• Strike Price: $82 | Expiration: 2025-08-08
• IV: 35.81% (moderate volatility)
• Leverage Ratio: 128.87% (aggressive potential return)
• Delta: 0.2407 (moderate sensitivity)
• Theta: -0.1626 (manageable time decay)
• Gamma: 0.0704 (responsive to price swings)
• Turnover: 11,270 (high liquidity)
• 5% Upside Payoff: $2.14 (max(0, 82.28 - 82))
This option provides the highest leverage ratio in the chain, ideal for aggressive bulls expecting a continuation of the rally. Its moderate delta and high gamma make it sensitive to further price surges, while the moderate IV and manageable theta balance risk.

Aggressive bulls may consider WDC20250808C80 into a bounce above $78.7994.

Backtest Western Digital Stock Performance
The backtest of Western Digital Corporation (WDC) following a 10% intraday surge shows promising results, with a strategy return of 110.97% and an excess return of 25.40% compared to the benchmark return of 85.57%. The strategy achieved a maximum drawdown of 0.00%, indicating it effectively managed risk, and a Sharpe ratio of 0.36, suggesting a good risk-adjusted return. The volatility was high at 44.97%, which may be a concern for risk-averse investors.

Seize the Storage Opportunity—But Stay Vigilant at Key Levels
Western Digital’s 9.7% surge reflects a confluence of earnings strength, strategic capital allocation, and AI-driven demand. However, the overbought RSI and narrowing MACD histogram suggest a potential near-term consolidation phase. Investors should watch the $73.3465 middle Bollinger Band as a critical support level. Meanwhile, sector leader Seagate (STX) gained 5.63%, offering a benchmark for broader industry momentum. Aggressive bulls can capitalize on WDC20250808C80 for a bullish bet, but caution is warranted as volatility peaks. Watch for a breakdown below $73.25 or a breakout above $78.7994 to confirm the next directional move.