Western Digital Surges 6.8% on Analyst Upgrades and AI-Driven Demand: Is This the Start of a New Bull Run?

Summary
• Western Digital (WDC) rockets 6.8% to $177.57, trading near its 52-week high of $188.77
• Morgan Stanley and Mizuho raise price targets to $228 and $180, citing long-term AI storage demand
• Nasdaq-100 inclusion and Micron’s bullish guidance fuel sector-wide optimism

Western Digital’s explosive 6.8% intraday surge on December 18, 2025, reflects a perfect storm of analyst upgrades, AI infrastructure tailwinds, and sector-wide momentum. With Morgan Stanley and Mizuho lifting price targets to $228 and $180 respectively, the stock’s rally aligns with surging demand for data storage in AI-driven ecosystems. The move follows Micron’s blockbuster earnings and hints at a broader industry shift toward high-capacity storage solutions.

Analyst Upgrades and AI Infrastructure Fuel Rally
Western Digital’s 6.8% surge stems from dual catalysts: analyst upgrades and AI-driven demand. Morgan Stanley raised its price target to $228 from $188, while Mizuho highlighted long-term customer orders extending through 2027. These upgrades coincide with the Nasdaq-100 inclusion and Micron’s $18.3B Q2 revenue guidance, signaling robust demand for memory and storage. The stock’s move mirrors broader sector trends, as AI infrastructure spending accelerates, driving demand for HDDs and SSDs in data centers.

Technology Hardware Sector Rally: Seagate (STX) Trails WDC’s Momentum
The Technology Hardware, Storage & Peripherals sector surged alongside WDC, with Seagate (STX) up 5.34% on the same AI-driven tailwinds. While WDC’s rally reflects analyst optimism and Nasdaq-100 inclusion, STX’s performance underscores sector-wide strength. However, WDC’s 6.8% gain outpaces STX’s 5.34%, suggesting stronger conviction in Western Digital’s long-term positioning for AI storage. Both stocks benefit from Micron’s bullish guidance, but WDC’s inclusion in the Nasdaq-100 adds a layer of institutional demand.

Options Playbook: Capitalizing on WDC’s Volatility and AI-Driven Bull Case
• 200-day average: $85.50 (well below current price)
• RSI: 55.93 (neutral, not overbought)
• MACD: 7.15 (bullish divergence from signal line 7.57)
• Bollinger Bands: $138.51–$188.24 (price near upper band)

Western Digital’s technicals suggest a continuation of its AI-driven bull case. The stock trades above all major moving averages and within Bollinger Bands’ upper range, indicating strong momentum. With RSI in neutral territory and MACD showing bullish divergence, the setup favors long positions. For options traders, the WDC20251226C180 and WDC20251226C185 contracts stand out:

• WDC20251226C180:
- Strike: $180 | Expiration: 2025-12-26 | IV: 62.11% (high volatility)
- Delta: 0.453863 (moderate sensitivity to price moves)
- Theta: -0.707698 (rapid time decay)
- Gamma: 0.022958 (high sensitivity to price acceleration)
- Turnover: 198,424 (liquid)
- Leverage Ratio: 31.60% (moderate leverage)
- Payoff at 5% Upside: $186.44 → $6.44 gain per contract
- Why it works: High IV and gamma make this ideal for a short-term rally, with liquidity ensuring easy entry/exit.

• WDC20251226C185:
- Strike: $185 | Expiration: 2025-12-26 | IV: 59.74% (reasonable volatility)
- Delta: 0.338568 (lower sensitivity, less risky)
- Theta: -0.584743 (slower decay)
- Gamma: 0.022036 (moderate sensitivity)
- Turnover: 162,115 (liquid)
- Leverage Ratio: 49.85% (strong leverage)
- Payoff at 5% Upside: $186.44 → $1.44 gain per contract
- Why it works: Balances leverage and risk, ideal for a conservative bullish bet.

Action: Aggressive bulls may consider WDC20251226C180 into a break above $185. Conservative traders should target WDC20251226C185 for a measured AI-driven rally.

Backtest Western Digital Stock Performance
The backtest of Western Digital Corporation (WDC) after an intraday surge of at least 7% from 2022 to the present shows favorable short-to-medium-term performance. The 3-day win rate is 56.46%, the 10-day win rate is 61.83%, and the 30-day win rate is 70.58%, indicating a higher probability of positive returns in the immediate aftermath of the surge. The maximum return observed was 13.54% over 30 days, suggesting that while there is volatility, WDC can offer decent gains if the initial conditions are met.

AI-Driven Bull Case Intact: Target $185–$190 as Next Catalyst
Western Digital’s 6.8% surge is a clear signal of AI infrastructure tailwinds and institutional confidence. With analyst price targets above $180 and Nasdaq-100 inclusion, the stock is positioned to test its 52-week high of $188.77. Key levels to watch include $185 (psychological hurdle) and $190 (resistance from Bollinger Bands). Sector leader Seagate (STX) up 5.34% reinforces the bull case. Investors should prioritize WDC20251226C180 for aggressive upside or WDC20251226C185 for a safer play. If $185 breaks, the AI storage story could accelerate—don’t miss the window.