Western Digital (WDC) Surges 1.34% on Earnings, AI Demand; Hits 2025 High

Western Digital (WDC) climbed 1.34% on Tuesday, extending its winning streak to six consecutive days with a cumulative gain of 17.67% over the period. The stock reached its highest level since September 2025, surging 2.22% intraday, driven by renewed investor confidence in its strategic direction and market positioning.

Recent earnings momentum underpinned the rally, with Q2 2025 results showcasing a 30% year-over-year revenue increase to $2.61 billion. Strong demand for high-capacity nearline hard disk drives (HDDs) in cloud and AI sectors fueled 36% revenue growth in those markets, which account for 90% of WDC’s total sales. Analysts highlighted the company’s improved inventory management and outperforming earnings per share as catalysts for the post-earnings 30.8% price surge.

Institutional investor activity further amplified the bullish sentiment. Major funds including Dimensional Fund Advisors LP and Sumitomo Mitsui DS Asset Management increased stakes in Q1 2025, while brokerages like Morgan Stanley and Barclays raised price targets. Despite some short-term selling by entities such as Grantham Mayo Van Otterloo & Co., the overall institutional backing reinforced market optimism. WDC’s $2 billion share repurchase program, authorized in May 2025, also signaled management’s conviction in the stock’s value proposition.

Strategic developments added to the momentum, particularly the accelerating merger with Kioxia Corporation. A $13.5 billion refinancing agreement in September 2025 secured critical support for the deal, which is expected to strengthen WDC’s NAND flash market presence amid surging demand from AI and 5G applications. The company’s product roadmap, including 22TB/44TB external drives and M.2-2230 SN770M SSDs, aligns with growing needs for high-capacity and compact storage solutions in AI and enterprise sectors.

Macroeconomic factors also played a role, with the AI-driven storage boom creating long-term tailwinds. Generative AI adoption, now at 65% in 2024, is intensifying demand for both HDDs and flash storage, particularly in edge computing and data centers. WDC’s leadership in heat-assisted magnetic recording (HAMR) technology positions it to capitalize on next-generation storage requirements, with mass production expected by mid-2027. The Federal Reserve’s rate cuts in late 2024 further boosted risk appetite, supporting the stock’s upward trajectory.

While challenges remain—such as cyclical inventory pressures and competition from Seagate—WDC’s robust guidance, 7.77% dividend payout ratio, and analyst consensus of $80.50 price target underscore its resilience. Short-term volatility, including insider share sales, has not dampened the broader positive outlook. The stock’s 85 RS Rating in early September 2025 highlights its relative strength, with 18 “Buy” ratings reinforcing confidence in its ability to navigate market dynamics while scaling AI-driven opportunities.