Western Digital (WDC) is trading around $451 per share—a 40 percent pullback from its June 18 peak of $746—yet the stock remains up 163 percent year-to-date and 313 percent over the past 12 months. The selloff has created a genuine buy opportunity.
At 17 times earnings with a five-year PEG ratio of 0.88, WDC is undervalued relative to its growth trajectory. The market is pricing in deceleration that isn't coming.
The thesis is straightforward: Western Digital controls a critical chokepoint in AI infrastructure. The company's hard disk drives store massive datasets for hyperscalers and enterprises, while its former subsidiary SanDisk (spun off in 2025) supplies the flash storage that feeds GPUs in AI workloads. SanDisk has rallied 163 percent year-to-date to $626.56—a separate bull case.
In fiscal Q4 2026, Western Digital reported revenue of $3.7 billion, up 44 percent year-over-year. Operating margin expanded to 41.7 percent from 26.1 percent. Adjusted earnings climbed 109 percent to $3.56 per share. These are not modest beats—they are blowouts.
Management's fiscal 2027 guidance reinforces the momentum: Q1 revenue projected at $4.1 billion (11 percent sequential growth) with adjusted EPS of $4.00 (12 percent sequential growth) and gross margin of 55 to 56 percent. The company has already sold out its HDD inventory through calendar 2026 and expects demand to exceed supply in 2027.
The August decline was a valuation reset, not a earnings miss. WDC beat both estimates and forward guidance, yet the stock compressed. That disconnect is the opportunity.
The memory supercycle is real and unfinished. Three major hard drive competitors exist. WDC's sold-out inventory and pricing power through 2027 suggest margins can expand further. At current levels, investors get growth at a discount. Buy WDC here.
