Western Digital Surges on AI-Driven Momentum: Can This Bull Run Continue?

Summary
• Western Digital (WDC) trades at $131.975, up 0.54% intraday
• Intraday high of $136.215 and low of $129.93 highlight volatile session
• Analyst upgrades and AI data center demand cited as key drivers

Western Digital’s stock surged amid a wave of analyst upgrades and surging AI-driven storage demand. The stock’s 0.54% gain reflects optimism around its role in the AI infrastructure boom, with recent reports highlighting its strategic positioning in NAND flash and HDD markets. As the sector braces for a potential inflection point, traders are scrutinizing technical indicators and options activity for clues on the next move.

AI Data Center Demand and Analyst Upgrades Fuel WDC's Rally
Western Digital’s intraday rally is directly tied to analyst upgrades and sector-wide momentum from AI-driven storage demand. A Simply Wall St. report highlighted analyst upgrades driven by AI data center demand, while Zacks noted Micron’s $8.5B NAND sales as a sector bellwether. The stock’s 0.54% gain aligns with broader tech-sector strength, as OpenAI’s Stargate project and hyperscale cloud storage needs amplify demand for NAND and HDD solutions. Additionally, WDC’s recent split into two entities—retaining HDD under Western Digital and NAND under Sandisk—has sharpened focus on its core strengths in AI-era storage.

Data Processing Sector Gains Momentum as WDC Outpaces Peers
The Data Processing & Outsourced Services sector, led by Seagate Technology (STX) at +0.155%, shows mixed momentum. While WDC’s 0.54% gain outpaces STX’s modest rise, both stocks benefit from AI-driven storage demand. Sector reports highlight hybrid outsourcing trends and AI-powered data extraction as growth drivers, with WDC’s HDD and NAND bifurcation positioning it uniquely to capitalize on divergent market needs. However, WDC’s aggressive technical indicators suggest it may outperform peers in the near term.

Options and ETF Strategies for Capitalizing on WDC's Bullish Momentum
• RSI: 84.31 (overbought)
• MACD: 10.69 (bullish), Signal Line: 8.79
• Bollinger Bands: Price at $131.975 (above middle band of $106.60)
• 200D MA: $62.90 (far below current price)

Western Digital’s technicals suggest a short-term overbought condition but sustained bullish momentum. Key levels to watch include the 52W high of $137.4 and the 200D MA at $62.90. While the RSI near 84.31 signals caution, the MACD histogram’s positive divergence and Bollinger Band positioning indicate continued upside potential. Aggressive bulls may consider leveraged options with high gamma and moderate delta for amplified exposure.

Top Options Picks:
• WDC20251010C130 (Call, $130 strike, 10/10 expiry):
- IV: 60.30% (moderate)
- Delta: 0.5838 (moderate sensitivity)
- Theta: -0.6375 (high time decay)
- Gamma: 0.0331 (high sensitivity to price moves)
- Turnover: $135,331 (liquid)
- LVR: 23.13% (moderate leverage)
- Payoff at 5% upside ($138.57): $8.57/share
- This contract offers a balance of liquidity and gamma, ideal for capitalizing on a breakout above $130.

• WDC20251010C131 (Call, $131 strike, 10/10 expiry):
- IV: 56.17% (moderate)
- Delta: 0.5512 (moderate sensitivity)
- Theta: -0.6048 (high time decay)
- Gamma: 0.0361 (high sensitivity to price moves)
- Turnover: $82,081 (liquid)
- LVR: 27.18% (moderate leverage)
- Payoff at 5% upside ($138.57): $7.57/share
- This option’s tight delta-gamma profile makes it a high-conviction play for a push above $131.

Action: Aggressive bulls may consider WDC20251010C130 into a breakout above $130, while conservative traders can use WDC20251010C131 for a defined-risk play.

Backtest Western Digital Stock Performance
Below is an interactive module with the full back-test results. Please explore the tabs for the strategy profile, test settings and performance metrics.Key observations:• A total of 0.5 %-surge signals were detected over the 2022-2025 period; the module details cumulative return, hit-rate, max drawdown, and other metrics. • Risk controls (10 % TP / 8 % SL / 20-day cap) significantly shape outcome—toggle them off in the module to see raw signal performance if needed.Feel free to adjust parameters or download the trade log directly from the module panel.

Position for the Next Leg of WDC's AI-Driven Rally
Western Digital’s rally is underpinned by AI infrastructure demand and strategic bifurcation, with technicals suggesting continued upside. Traders should monitor the 52W high of $137.4 and 200D MA at $62.90 as critical levels. The sector leader, Seagate (STX), at +0.155%, reinforces the sector’s strength. For now, holding long positions with options like WDC20251010C130 offers amplified exposure to a potential breakout. Watch for a close above $136.215 to confirm the next phase of the rally.