Western Digital Soars 8.15% on AI-Driven Storage Surge and Strategic Split – What’s Next?

Summary
• Western Digital (WDC) surges 8.15% to $129.85, hitting a 52-week high of $130.03
• Company splits into two entities: Sandisk (SNDK) and Western Digital (WDC)
• AI demand for high-capacity HDDs drives sector-wide growth
• Options chain shows aggressive bullish positioning with 20 contracts trading at high implied volatility

Western Digital’s dramatic intraday rally reflects a perfect storm of structural AI-driven storage demand, strategic corporate restructuring, and technical momentum. With the stock trading near its 52-week high and a 46.6% surge over the past month, investors are betting on the company’s dual-track strategy to dominate both HDD and flash memory markets. The split into Sandisk and Western Digital has unlocked new growth vectors, while AI’s insatiable appetite for data storage ensures sustained demand for high-capacity drives.

AI Storage Demand and Strategic Restructuring Ignite WDC's Rally
Western Digital’s 8.15% intraday surge is fueled by two pivotal catalysts: the AI-driven storage boom and the company’s strategic split into Sandisk and Western Digital. AI’s exponential growth has created a structural demand for high-capacity HDDs, with hyperscalers like Google and Oracle expanding infrastructure to store exabytes of data. Western Digital’s recent earnings beat (EPS of $1.66 vs. $1.48) and guidance for 34.28% EPS growth in FY2026 underscore its ability to capitalize on this trend. Simultaneously, the separation of Sandisk (flash memory) and Western Digital (HDDs) has streamlined operations, enabling each entity to target distinct markets. Analysts at Rosenblatt and Mizuho have upgraded price targets to $125–$120, reflecting confidence in the split’s value creation and AI’s tailwinds.

Hard Disk Drives Sector Surges on AI Infrastructure Build-Out
The Hard Disk Drives sector is experiencing a renaissance driven by AI’s storage demands. Seagate Technology (STX), the sector leader, has mirrored WDC’s momentum, surging 8.23% intraday. Both companies are benefiting from hyperscalers’ need for cost-effective, high-capacity storage. Seagate’s recent shipment of 30TB HAMR HDDs and Western Digital’s 36TB roadmap highlight the sector’s technological leap. While SSDs offer speed, HDDs remain dominant in data centers (80–90% of storage capacity) due to their cost efficiency. The sector’s gross margins have doubled to ~40% as long-term supply deals with cloud providers stabilize pricing.

Bullish Options and ETFs for AI-Driven Storage Growth
• MACD: 8.72 (above signal line 7.93), RSI: 80.99 (overbought), Bollinger Bands: $120.58 (upper), $102.33 (middle), $84.08 (lower)
• 200-day MA: $62.27 (far below current price), 30-day MA: $94.45 (below), Turnover Rate: 4.08% (healthy)

Western Digital’s technicals scream short-term bullish momentum. The stock is trading near its 52-week high of $130.03, with RSI at overbought levels and MACD in a strong positive divergence. Key resistance lies at $130.03 (52W high), with support at $102.33 (Bollinger middle band). For aggressive bulls, the WDC20251010C125 call option stands out: it has a delta of 0.69, implied volatility of 54.20%, and theta of -0.53, indicating strong sensitivity to price moves and time decay. With a leverage ratio of 17.11% and turnover of 325,978, this contract offers high liquidity and potential for 248.62% gains if WDC closes above $125 by October 10. A second top pick is WDC20251010C126, with a delta of 0.68, IV of 43.14%, and theta of -0.496, offering a 212.82% payoff potential. Both options align with the stock’s breakout trajectory, leveraging AI-driven demand and the split’s strategic clarity. For ETF exposure, the XLF (Financial Select Sector SPDR) is a proxy for broader market optimism, though no direct HDD ETFs are available.

Backtest Western Digital Stock Performance
Western Digital Corporation (WDC) experienced an intraday surge of approximately 8% on February 26, 2022. Let's analyze the stock's performance after this event:1. Earnings Estimate Revisions: Before the surge, WDC's earnings estimates for Fiscal Q2 2022 had seen 1 upward revision and 22 downward revisions over the last 3 months. Similarly, revenue estimates had seen 0 upward revisions and 21 downward revisions. This indicates that prior to the surge, there was a general trend of downward revisions, which could suggest a potential upside surprise with the earnings report expected on January 27, 2022.2. Recent Performance: Following the surge on February 26, 2022, WDC's stock gained about 8% over the next one year. This suggests that the market reacted positively to the intraday surge, potentially reflecting confidence in the company's future performance or positive market sentiment.3. Market Sentiment: The broader market sentiment at the time of the surge was generally positive, with the S&P 500 experiencing a gain of 0.17% over the same period. This could have contributed to the positive performance of WDC's stock following the intraday surge.4. Sector Performance: It's important to note that WDC's performance is not isolated. The Computer and Technology sector also experienced a loss of 4.23% over the past month, which could have influenced investor behavior. However, WDC's narrower loss of 1.57% compared to the sector's broader decline and the subsequent positive reaction to its intraday surge suggest that it may have been perceived as a stronger performer within its sector.In conclusion, WDC's intraday surge of 8% on February 26, 2022, was followed by a positive performance over the next year, with the stock gaining around 8%. This was likely driven by a combination of factors including earnings estimate revisions, market sentiment, and sector performance. The upcoming earnings report on January 27, 2022, will be a key event to watch for investors to assess the company's continued performance and potential for future growth.

Position for AI-Driven Storage Growth: Key Levels to Watch
Western Digital’s rally is underpinned by structural AI demand and a strategic split that positions both entities for growth. The stock’s proximity to its 52-week high and overbought RSI suggest a potential pullback, but the long-term trend remains bullish. Investors should monitor the $130.03 level for a breakout confirmation and the $102.33 support zone. The sector leader, Seagate (STX), is up 8.23% intraday, reflecting synchronized momentum. For traders, the WDC20251010C125 and WDC20251010C126 options offer high leverage on a continued AI-driven rally. If WDC closes above $125 by October 10, the call options could deliver exponential returns. Holders should also watch for earnings surprises and HAMR technology adoption timelines, which could extend the bull case into 2026.